It's no secret that women don't benefit nearly as much as their male counterparts when it comes to our superannuation system. A super fund benefits the most when contributions are as high and consistent as possible. As such, interruptions to this process, like having a baby, can have disproportionate effects on women's super compared to men's. But this super gender gap has been made worse by the coronavirus pandemic.
According to Colonial First State's Retirement Realities research, women's super accounts have fared far worse than men since the coronavirus pandemic hit. This research analysed data from over 750,000 Colonial First State members over the five years from 2016 to 2020.
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Women's super cops the worst of the pandemic
This difference in how men and women's super have coped with the pandemic wasn't helped by the fact that men, on average, had more in their super finds than women before the pandemic even struck. According to Colonial First State, the average man had $88,934 in super in December 2020, compared to just $73,139 for women. That's a gap of 18%. Which is actually worse than the gap of 16% that was present in 2016.
The report also states that men withdrew more of their super than women through the government's early access scheme last year. Even so, the effect of the pandemic was still worse on women's super balances due to the lower starting balances women had. Women experienced a 21% hit to their super balanced on average from the pandemic, compared to 18% for men's super.
As mentioned above, the reasons for this imbalance are numerous. Consider the overall pay gap between men and women for starters. And then there's the fact that women tend to take more time away from work when children arrive. Which usually results in a halting of super contributions. And the Retirement Realities research also found that men (at 61%) were statistically far more likely than women (at 39%) to salary sacrifice (put in extra money) into super as well.
So what can we do about the gap?
Kelly Power, general manager at Colonial First State, said the following on the gender gap in the report:
The gender gap in the Australian superannuation system is a real issue that sees women financially disadvantaged. Coronavirus has pushed us back even further, creating greater urgency for solutions to the retirement realities challenging Australians, particularly women.
So how can we fix this mess? Ms Power has a few ideas that perhaps we should all consider:
The super industry and the government must unite to create a system that closes the gender gap for good. Specific measures such as mandating super contributions on paid parental leave and removing the $450 per month threshold for superannuation to be paid will improve the retirement savings adequacy for low-income earners and casual workers, many of whom are women.
The report also noted that receiving financial advice made "a significant difference" for women who are approaching retirement. Reportedly, women aged between 50 and 64 who sought financial advice made a 199% higher average voluntary contribution to super in 2020 than the women who did not seek advice.
