The networking body for women in the superannuation and broader financial services industry has published a report with think tank Per Capita examining the history of superannuation for Australian women.
The paper has also called out opponents for the gradual superannuation guarantee rate increase from its current 9.5 per cent to 12 per cent in 2025, noting the argument that the 0.5 per cent increase scheduled for next year will reduce or slow wage growth.
But it has pointed to Per Capita research, which has analysed the effects on workers’ wages from the Abbott government freezing the SG rate in 2014.
It found workers had suffered a “significant loss” in net income, calculated as changes to both real wages and forgone super contributions combined over the five years from the SG freeze. Workers on median wages lost more than $4,300 in super contributions as a result, according to Per Capita.
The research also concluded there would be no reason to expect the losses would not compound during the next five years if the SG rate is again frozen at 9.5 per cent instead of incrementally raising it to 12 per cent.
Women in Super chair Cate Wood has opposed the likes of Liberal MPs and senators such as Andrew Bragg and Tim Wilson, as they cast doubts on whether the scheduled SG increase should go ahead. Ms Wood has said the rise however will be crucial for women, particularly after the disproportionate impacts of the early release scheme and the COVID economic crisis.
While women were found to not withdraw as much money as men under the early super scheme, they did empty more of their accounts. Per Capita has estimated if young women withdraw the maximum $20,000 from their super, their savings will be reduced by roughly 50 per cent more than men’s, as they lose the compounding interest and potentially take part-time work or leave the workforce to have children.
“If the government backs away from this commitment yet again they will be held to account for every woman struggling to pay rent or sleeping in a car in future decades,” Ms Wood said.
“Without preservation, compulsion and universality, the superannuation system will return to be a predominantly male privilege and women’s hard-fought improvements in economic security and independence in retirement over the past three decades will be lost.”
Per Capita found that as a result of the 2014 SG freeze, a worker on the full-time median wage lost $4,332.99 in super, while the median wage, when adjusted for inflation and examined for real growth, was found to have fallen.
According to Per Capita, the real median wage in 2014 was $56,524 in today’s dollars, compared to the current $55,432. The average worker’s take-home pay has thus declined by $1,092 a year in real terms, giving a net loss of $5,24.99 when considering their lost super contributions.
Looking at the effects for women, female workers on the minimum wage were calculated to have lost around $4,500 in super due to the freeze, while those earning around $95,000 a year were forecast to have lost almost $7,000 since 2014.
Women, who earn around 14 per cent less for the same work and can exit the labour market during motherhood only to return to part-time work, could benefit from a higher compulsory rate, the paper argued, and it could bridge the retirement gap and prevent poverty.
“It is workers on the minimum wage, whose pay rates are set by arbitration under the award system, who will benefit from an increase in the SG,” the Women in Super report stated.
“[High-income] workers on enterprise bargaining agreements, or those with individual workplace agreements in professional roles, are more likely to be receiving superannuation contributions in excess of the SG rate already.
“Proceeding with the legislated increase in the SG rate to 12 per cent, then, is critical for the financial security of low-income Australian women in retirement.”
Women in Super has called for superannuation tax concessions to be reviewed and reshaped to be more fair, targeted and sustainable. It has also suggested looking at additional targeted measures to help women recover their super savings following the COVID crisis.
Other changes recommended by the report include additional annual $1,000 super contributions from the government for low-income workers, the removal of the $450 monthly earnings threshold and payment of super on paid parental leave.
The group also has called for the government to undertake and publish a gender impact statement for any changes to age pension or retirement income policy, as well as ongoing tracking of the women’s retirement gap.
