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Women retire with $150,000 less

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Brooke Boland

Here’s what you need to know about superannuation and how to retire with more.
Women retire with $150,000 less

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When Colleen Sells, Media Super Business Development Manager, visits businesses to discuss superannuation with employees she encounters a culture where people, both men and women, just don’t understand how super works.

‘They don’t want to deal with it. The comments I mostly hear are that they just find it very confusing and would rather give it to somebody else to sort out,’ she said.

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‘I will often do what I call a “super check”, where we check their insurance, beneficiaries and then we can chat about investment choice. But I’m guided more by the individual and what they want to know, with the intention of just hopefully explaining it in simple language so that they have a better understanding.’

According to recent research#, it’s women who are hurting the most when it comes to saving for retirement.

While women make up 46.2%# of the workforce in Australia they are only retiring with half the super savings of Australian men. This means more than 80% of women don’t have adequate savings to fund their retirement*.

In plain terms, the average superannuation account balance for women when they retire is around $150,000 less than the average for men.* That’s not a gap; it’s the Grand Canyon equivalent of gender inequality when it comes to retiring comfortably.

Why aren’t women saving anywhere near as much superannuation?

Sells said there are many factors contributing to the super gap, but the gender pay gap is a big one. As women earn an average of 16% less compared to men, they accumulate less super. Less pay means the 9.5% super contribution is based on a smaller amount to start with.

Discrepancies in pay are higher for those who work as key management personnel, closely followed by executives, managers, and even senior managers. Those in Administrative and Support Services often fare the worst.

This has been evident in Sells’ experience as well. ‘It’s in middle management and above where there are discrepancies in pay which means a difference in the amount of super that is paid,’ she said.

Another factor is breaks from work – whether it’s maternity leave, extended time off to raise children, or caring for elderly family members. As very few workplaces pay super contributions as part of maternity leave, these extended breaks can mean long periods without contributions.

If you are taking a few years off to start a family, this can lead to what’s known as the ‘super baby debt’ for mothers of up to $50,000.*

‘Maternity leave and then coming back part time also makes a huge difference in women’s superannuation because they aren’t earning as much,’ said Sells

‘If you earn less than $450 per month from a single employer you’re not entitled to super at all.’

The super problem goes even deeper. An Industry Super Australia analysis of the latest ATO data, released on International Women’s Day, reveals that women were underpaid $1.84 billion in super contributions by their employers in 2013-14. The average underpayment was $1,550.

Three super tips for women

As Media Super recently put together a guide, we asked Sells for some tips on what women (and men) can do to help close the super gap.

1. Step up, it’s your future

We have all heard the somewhat tired line ‘a man is not a financial plan’, but it still holds true. One in five women cite a lack of time as the reason they haven’t sorted out their super. Set some time aside to get started. It might only take you one hour.

2. Contribute a bit more

Extra contributions are a sure way to build your super up. ‘Even a small amount makes a significant difference over a long period of time,’ said Sells.

‘We have calculators on our website so people can play around with and, if they can contribute a little bit, see what difference that will make for their retirement.’

3. If planning to start a family – adopt the one percent rule

To offset the ‘super baby debt’, it is recommended that women who plan to start a family adopt the ‘one per cent rule’, which means adding an extra one per cent to their superannuation contributions for the rest of their working lives.

For some more great advice, read the Media Super guide on closing the gender super gap.

Read: Take 60 minutes to help close the gender super gap

The list includes practical advice on how to check your super savings and, if you find out you have multiple super accounts (as many of us do), how to easily combine these all in the one place. Considering that women live an average of five years longer than men, it really is 60 minutes worth spending.

‘The more people are informed, the better they can make financial decisions for themselves,’ concluded Sells.

# Workplace Gender Equality Agency, www.wgea.gov.au/sites/default/files/Stats_at_a_Glance.pdf

* ASFTA SuperGuru, http://www.superguru.com.au

This article provides general information only, and does not take into consideration your personal objectives, situation or needs. Before making a decision to combine your superannuation, you should consider any penalties such as exit fees, change to insurance cover or loss of benefits that may apply and, if necessary, consult a qualified financial adviser. Before making any financial decisions you should first determine whether the information is appropriate for you by reading the relevant Product Disclosure Statement and/or by consulting a qualified financial adviser. Issued by Media Super Limited (ABN 30 059 502 948, AFSL 230254) as Trustee of Media Super (ABN 42 574 421 650).

About the author

Brooke Boland is a Melbourne-based freelance writer.

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