HESTA has pushed for a reform of the superannuation system, with fears that the super gender gap will be widened as young women wipe their savings with the early release scheme.
HESTA data on members accessing their super under the early release scheme revealed a high proportion of younger women has “effectively drained” their super, decreasing their balances by between 60 per cent and 78 per cent.
The fund saw around 62 per cent of its female members who claimed early super apply for the full $10,000 they could access before the end of June.
Just over half of members who accessed their super early under the scheme were aged between 24 and 39.
The fund reported members aged between 18 and 24 had virtually drained their accounts, leaving them with a median account balance of $1,049, a median decrease of around 78 per cent.
Members aged 25-39 were left with a median balance of $3,609, a decrease of 68 per cent.
HESTA chief executive Debby Blakey said the government’s Retirement Income Review panel should urgently consider the impact of the early super access scheme on women’s retirement outcomes.
“We understand how challenging the economic impact of COVID-19 has been for many people,” Ms Blakey said.
“The early release super scheme has provided vital short-term assistance for our members but if urgent action is not taken these young women risk facing a greater vulnerability to poverty as they age.
“We already know that women over the age of 55 are the [faster-growing] group of people experiencing homelessness and unless we reform our super system to make it fairer for women and the [lower-paid] we are consigning the next generation of Australian women to the same grim reality.”
HESTA has paid out more than $720 million to around 91,000 members. According to the latest APRA figures, it was sixth in funds receiving the highest numbers of applications, with HESTA making up just under 5 per cent of all applications received.
Ms Blakey added members accessing the early release were more likely to be lower paid.
“They typically earned between 9 per cent to up to 14 per cent less than the typical member in their age group, making it that much harder to rebuild their super over the longer-term,” she said.
In its submission to the Retirement Income Review, HESTA called for a range of measures to help create a fairer super system for women and lower-paid workers.
The recommendations included value unpaid caring roles in a way that recognises the economic contribution made by the work, make superannuation be paid on Commonwealth paid parental leave, remove the $450 threshold for superannuation guarantee payments and provide super entitlements for workers who are not classified as employees or perform non-standard work.
It has also urged the superannuation guarantee rate to be moved to 12 per cent as soon as possible.
Other suggestions were to review the taper rate for the age pension, improve the process for super splitting for relationship breakdowns and recognise the value of insurance in super for low-income earners.
“We’ve been strong advocates for reform of the super system to make it fairer for women and the [lower-paid],” Ms Blakey said.
“Women are already well behind men when it comes to saving for retirement. We don’t want to see younger women paying an even greater price later in life because of a superannuation system that has a gender blind spot.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].