Australian women are retiring with about $50,000 less in super savings than men and will continue to lose thousands of dollars until superannuation is paid on Commonwealth Paid Parental Leave, according to new modelling released on International Women’s Day.
Analysis by Industry Super Australia (ISA) shows the average super balance for a woman in her early 60s is just $159,600, compared to $210,800 for men.
Without intervention, the report says the gender super balance will persist for at least the next four decades. To improve equity in the system, it is calling on the Government to pay super on Commonwealth Paid Parental Leave, combat unpaid super by mandating that super is paid on payday, and increase the Low-Income Superannuation Tax Offset so that it aligns with tax brackets.
According to the report, in 2019-20, one in five women were affected by unpaid super, meaning they misses out on a total of $1.3 billion in employer super contributions. Over the last seven years, women missed out on $10.8 billion, while about a third of women in their 20s earning less than $50,000 have been short-changed.
One of the key drivers of the unpaid super problem, Commonwealth Paid Parental Leave, introduced in 2011, remains the only form of leave upon which superannuation is not required to be paid, affecting about 170,000 women each year. The union movement, including the Australian Nursing and Midwifery Federation (ANMF), continues to campaign for super to be paid on parental leave.
“It is time the government bridged the gender super gap,” Industry Super Australia Advocacy Director Georgia Brumby says.
“It’s not acceptable that women are continuing to retire with balances persistently lower than what they need for an adequate retirement. The first step in making super fairer is to pay super on parental leave. It is a glaring inequity that leads to millions of mums being worse off retirement.”
Similar analysis by super fund HESTA reveals Australian mums have missed out on more than $2.8 billion in super savings at retirement from taking time out of the workforce to have children.
Its modelling shows delaying paying super on paid parental leave for one year until 1 July 2024 would reduce the retirement savings of a typical member who has a child in the financial year 2024 by more than $6,000. A further delay until 1 July 2025 would cost a member with two young children more than $12,700 in retirement savings.
“Failing to pay super on parental leave pay has seen working mums unfairly miss out on billions of dollars in super, and this research shows they’ll keep losing thousands of dollars in retirement savings each year this important equity reform is delayed,” HESTA CEO Debby Blakey says.
“Our super system is one of the world’s best but clear, persisting gaps remain where millions of Australians, mainly women, are still falling through the cracks and not getting the full benefits of super. For women this means they are still retiring with around a third less super than men are.
“Extending the Super Guarantee to workers taking paid leave to care for children is an important policy that will help create a fairer retirement system for all Australians and is a key step towards addressing the gender super gap.”