‘No magic bullet’ for fixing super gender gap: Actuaries Institute

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Under current policy settings, women will continue to retire with less in superannuation savings, the Actuaries Institute annual summit has been told, with a warning there is no single solution that will bridge the gap. 

A report from three prominent superannuation experts has explored the gender retirement gap, reporting that Australian women are set to end their working lives with around 25 to 35 per cent less in savings. 

But out of 34 OECD nations, Australia ranks seventh-lowest for the gender pension gap, due to the mitigating effect of the means-tested age pension.


“Australia’s system is considered good in the context of developed nations globally. But we have a 25 to 35 per cent gap in balances at the point of retirement,” Rice Warner consultant Richard Dunn told attendants at the Summit.

“If that doesn’t tell you there’s an issue that needs to be dealt with, there’s nothing that will – so there’s clear problems.”

The Retirement Income Review had found 93 per cent of the gender divide in retirement balances was fuelled by the pay gap, the result of different earnings through individuals’ lives.

Regardless of age and wealth, all Australians are affected, the new research noted, although outcomes do improve for women in higher wealth deciles.

The superannuation system is still yet to mature fully, with people yet to retire having received the full super guarantee through their working life, at current levels. In future, the gap between men and women’s balances is expected to narrow, but the Retirement Income Review and the Actuaries Institute have projected that under current policy, it will not close.

“There is no magic bullet. You know, people complain about the issue, but what we need is a whole series of incremental changes,” Rice Warner founder Michael Rice said.

“We’ve made some recommendations… every little bit helps. There’s no point saying we can solve this quickly. The problem is going to be with us for a few generations.”

There are steps that can be taken across different cohorts and levels, Mr Rice said, but it will require a litany of actions, rather than a single solution. 

The government can change legislation around superannuation, super funds can offer guidance to members and develop different products, employers can shift their policies around paying super contributions and individuals can increase their contributions. 

Recommendations: Cut $450 threshold, implement carer’s credit

In policy, the report has recommended axing the $450 monthly threshold that applies to the superannuation guarantee, as women are more likely to work in part-time and casual positions and to lose out on super contributions under the rule. The report has projected a 4 per cent increase in women’s balances at retirement, if the threshold is removed. 

The report has also called for requiring employers to pay super on all paid parental leave, estimating the measure could add 2.5 per cent to women’s balances at retirement. 

It has also called for the government to make super contributions or pension credits for carers, single mothers or single women caring for elderly or disabled individuals, which could be based on the minimum wage. 

“I’m a big proponent of carers’ credits,” Mercer senior partner David Knox said.

“How we do it is another question, but we need to recognise what I’ll call is voluntary caring, is a contribution to society and part of the fairness in our community is to recognise that, not to reward it with big dollars so that people don’t lose out by caring.”

Further, it has suggested stretching out the term allowed under “catch-up” provisions for super contributions beyond its current five years, to benefit women who return to the workforce.

“When women return to the workforce, they often return part-time, because the youngest child is three or four and doesn’t [allow] for full-time work,” Mr Knox said. 

“And even with part-time work, the female, the wife, the mother, hasn’t got capacity to give more to super because you’re on a part-time wage. It’s only 10 or 15 years later when they’re in full-time work that they’ve got that capacity.”

The government could move in the right direction for women’s outcomes, with the appointment of financial services minister Jane Hume as Minister for Women’s Economic Security, Mr Knox added. 

But Mr Rice voiced some scepticism, referring to a lack of action after the 2016 Financial System Inquiry. 

“And yet, when it was the royal commission into aged care, suddenly billions of dollars are now being put in to address the obvious problems there,” he said. 

“Should we be cynical and say unless there’s a royal commission, nothing will happen because there’ll be no pressure.”

Beyond the policy changes, the report has also pushed for societal changes. 

Women need better financial education, adjusted to the specific difficulties they may face, it said. Working-from-home arrangement, giving parents more options has also been listed, along with reviewing the income level for female-dominated industries. 

In financial products, the report has called for requiring lifetime annuities to be provided on a unisex basis and to require all retirement income streams to be indexed, to reduce the shortfall in the real value of income in the later years – particularly as women typically outlive men.

“I think we need to think about in providing retirement income, we are providing income for life,” Mr Knox said.

“And we shouldn’t penalise women, because they live a bit longer… So I think we need to think about unisex annuities, they are operating in Europe. I’m not necessarily saying we need legislation, but I think we need to think it through as a profession.”

Other suggestions include permitting smaller account balances to be subsided by larger accounts and to require the development of joint life income products, to benefit the survivor of a couple.


‘No magic bullet’ for fixing super gender gap: Actuaries Institute
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Sarah Simpkins

Sarah Simpkins

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].


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