The gender super gap: How gender inequality affects superannuation

The gender pay gap in Australia is a serious concern. With traditionally more time out of the workforce than men, women have a harder time building their superannuation and the impact needs to be recognised. By shining a light on the issues, AustralianSuper hopes to contribute to a better retirement outcome for women.

In a report that looks at the stories of 40 women and their super, AustralianSuper has looked to uncover how gender inequality to date has affected women as they approach retirement, and in retirement.

At almost 53, and with little superannuation Magda* can’t even contemplate the idea of retirement.

‘They’ll carry me out on a stretcher when I’m probably 93 and die at my desk,’ she says.

It’s a flippant comment, but the harsh reality is many women like Magda are not financially ready for retirement. Meaning they're vulnerable to financial instability or even poverty in retirement. This is due to several factors, including time out of the workplace to care for children or when a relationship has ended in divorce.

Magda is one of 40 women to share her story as part of the Future Face of Poverty is Female report commissioned by AustralianSuper to investigate the gender gap in superannuation.

The report found that women retire with 42% less super than men. In real terms, if a man retires with $270,710, a woman gets just $157,050.

Women retire with 42% less super than men.

The research concluded Australia’s retirement system doesn’t recognise and reward the unpaid caring work that women do – leaving them vulnerable to poverty in old age. But it’s a complex issue.

A series of structural inadequacies, and varied dynamics over the course of a woman’s life can lead to superannuation poverty.

Some reasons include:

  • The gender pay gap. On average, women earn $241.50 a week less than men.
  • Research shows women are more likely to take time off to care for children, elderly parents or family members with special needs. Superannuation isn’t a mandatory part of paid parental leave or carers payments.
  • Almost half of women work part-time and many chose lower paid work to prioritise their caring responsibilities.
  • Unpaid caring makes women particularly vulnerable if there is an unexpected life event like divorce or the death of a partner.
  • Women live 4 to 5 years longer than men with less retirement savings.


The gender super gap starts with the pay gap

The gender pay gap in Australia is at 14%. On average, men are paid $83,050 a year and women receive $68,220. AustralianSuper data shows the impact of the gender pay gap on super starts at an early age.

At 18-29 years-old male members have an average balance of $10,166, while females have just $8,408. But the biggest shift happens at age 28 – a time when many start a family.

Data from the Household, Income and Labour Dynamics in Australia Survey (HILDA) shows at age 28 female incomes flatline at around $1000 - $1,250 a week (on average), while male earnings steadily increase to over $2,000 a week before age 40.

At 50 and running her own consultancy Sarah* is still experiencing the pay gap.

I get paid less than men, equivalent men… I don’t charge the same rate as my peers, but I have to justify my rate often,’ she told the Future Face of Poverty is Female report.

‘I will often say to them, ‘so imagine I’m a man, is it still expensive?’


The double penalty

Time out of the workforce and returning part-time has a big impact on your superannuation savings, but it can also slow career progression and future earning potential. It’s known as the superannuation ‘double penalty effect’.

It’s something Financial Planner Ling Fang has seen personally and professionally over the course of her career.

‘I’ve experienced it myself, I've had 3 children and the reality is, every time I had a baby I took 12-18 months off to care for them,’ she says.

‘During that time there are some parental payments, but there's no superannuation guarantee paid on them unless, your company has a policy in place to do so, and after a short period of time, there's actually no pay at all.’

When she returned to work, she found herself in a new role, with a lower level of responsibility.

‘There was restructure and I went from a senior Financial planner to a Financial planner,’ says Fang. ‘And then when I had my second maternity break, I was given another junior role, so I could ‘focus on my family’.’

‘The result of time out of workforce means women may find it harder to stay relevant in the ever-changing work landscape,’ says Fang. ‘When they return, they tend to pick up low-skilled work which means lower pay than what they had before.’


Divorce and separation

Time out of the workforce for unpaid caring work can leave women vulnerable if there is an unexpected life event like divorce or the death of a spouse.

One in 3 marriages end in divorce, and single women are most at risk of poverty in retirement.

The Future Face of Poverty is Female report found the impact of divorce was particularly significant when career sacrifices were made on the promise of a shared financial future.

The report also found superannuation splitting is often seen as ‘complicated and expensive’ and many forego their rights.

In her role as a financial planner at AustralianSuper Fang often sees mother’s going through divorce, who are struggling to pay the day to day bills.

‘It’s difficult because the main focus of the female's income is dedicated to paying off the mortgage and raising the children,’ says Fang. ‘Retirement seems to be the last thing on their mind at that particular point in time.’

‘Women who divorce later in life suddenly find themselves with half the assets and a mortgage and they may even need to use their super to help pay off the mortgage,’ says Fang.

As women reach retirement age, Fang says many divorced women like Magda, feel they must work well past retirement age to have enough money to get by.

‘They have this ongoing concern that they've got no fall-back plan.’



Closing the gender super gap

There is no quick fix, but AustralianSuper research shows lifting the superannuation guarantee from to 12% by 2025, as legislated by the Australian government, will go a long way to closing the gender super gap.

Rose Kerlin, AustralianSuper Group Executive for Membership, highlights this, suggesting that people need to be contributing a minimum of 12% over 40 years of the average full-time wage to achieve a more comfortable retirement.

Kerlin says an average worker will end up with $20,000 more over their lifetime, if we go to 12%.

‘I believe that the 12% is the number one thing that would help all Australians achieve more adequacy in retirement savings,’ she says.

Kerlin says this is particularly important for generational change.

‘If you’re heading into the workplace at age 18, 20 or even earlier and you’re a getting 12% super contribution, then that’s going to stand you in good stead for retirement,’ she says.

From 1 July 2022, the superannuation guarantee rate increases to 10.5%. This is an increase of 0.5%. The rate is due to increase a further 0.5% each year until it reaches 12% in 2025. 



Taking actions for a better future

While women are at a disadvantage when it comes to retirement savings, there are steps you can take to catch up when you can.

A Women in Super guide developed by AustralianSuper has a range of tools, information and simple steps you can take to help boost your super balance.

‘AustralianSuper has a strong focus on education, and we run seminars targeting women which are presented by financial planners and education managers. We run joint programs with various organisations to present to their female workforce and we run promotions to engage women with their super at an earlier age,’ says Fang. ‘We want women to speak up about their concerns for their financial future,’ she says. ‘It’s not embarrassing and it’s not shameful to review your situation.’

‘It’s never too early or too late, or the situation is too dire to see a financial planner or to take steps to improve your finances.’ says Fang.



*Magda and Sarah are pseudonyms. Their real names are not used in the Future Face of Poverty report to protect their privacy.



This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.

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