Reality of super for women

The reality of super for women

For working women in Australia, superannuation might be something kept at the back of mind - after all, retirement probably feels way off! Thankfully, in many cases, retirement probably is a few decades away but that doesn’t the change the fact that according to the Association of Superannuation Funds of Australia (ASFA), on average, a woman’s superannuation balance at retirement is $114,000 less than a man’s, with women more likely to retire in poverty.

The Super Gap’s Key Facts

For the uninitiated, this may be the first time you’ve become aware of the super gap. Despite the name, there’s nothing ‘super’ about it.

To help you understand more about it and know what might be causing the super balance disparity between the sexes, we’ve collated some key facts to get you up to speed.

Causes Behind The Super Gap

There’s quite a few of these, so let’s expand on the issues raised above.

Parental Leave And The Motherhood Penalty

When children come into the world, it is expected that an adult from their family unit stays at home as the primary caregiver. Historically and traditionally this role has fallen to women. And the stats back it up: the 2013-14 Paid Parental Leave Scheme Review shows that 99.4% of primary caregiver recipients were women.

While parental leave certainly applies to both men and women, employer-funded parental leave allowances showed a similar trend with 91.6% manager and 95.6% of non-manager recipients being women as the primary caregiver.

So what does this mean for women? It means that women are taking significant time away from work during the birth and early life of their child. While they’re taking that time, they’re potentially not earning an income. Which means women aren’t receiving any super contributions during this time, either.

You’d be right to think this is a tad loco, like there should really be a help plan for mothers who are taking time from work to take on childcare responsibilities. There’s been a lot of discussion and debate, and some criticism, about getting more women into the workforce after or during parental leave that shows it’s not as simple as just “getting back to work”.

This is because women face a series of hurdles when it comes to career progression, earning potential and super balances. Otherwise known as: the motherhood penalty.

Workforce Casualisation

Here’s where it gets a little trickier.

It’s estimated that 82% of women who return to work after childbirth are returning to part-time roles, and it’s not due to choice.

  • Childcare can be cost prohibitive at an average of $70-$192 a day
  • The 2016 census reports that 34 percent of women employed part-time perform over 15 hours of unpaid domestic work per week. This shows that more flexible working conditions are a necessity for a huge percentage of women
  • Casualisation of the workforce is becoming more and more common, with Australia recording one third of the workforce are now employed part-time - a figure higher than ever before

These stats put the crux of the situation facing women into the spotlight, because many women will likely have to weigh up the considerable costs of childcare versus unpaid carer duties when looking to return to the workforce. This is because full-time work is nearly a situational impossibility for many.

The Gender Pay Gap

The gender pay gap has hit the headlines and our news feeds in a big way recently, especially via Hollywood and the entertainment and sports industry.

The Government’s Workplace Gender Equality Agency (WGEA) has delivered its findings in their 2017 scorecard and shows that women are still well behind men when it comes to their income.

For women working a full-time base salary alone, in 2016-2017 they were paid an average of 17% less base salary than men across all occupations and industries, while factoring total remuneration pushes that gap out to 22.4%.

In Aussie dollars, that means women are receiving an average of $26,527 less a year than men for doing the same jobs in the same industries.

When you tally the difficulty faced by women with parental leave, the reduction in full-time job availability, and a substantial wage gap - superannuation balances take a big hit. Sound super? Not so much.

What Initiatives Are In Place To Bridge The Gap?

The good news is that there’s plenty of organisations and fantastic people working towards super (and therefore gender) equality.

Ross Clare, who is the Director of Research for The Association of Superannuation Funds of Australia (ASFA), has recommended the following policy changes to start making a meaningful impact to women's superannuation:

  • Abolition of the $450 a month threshold for payment of Superannuation Guarantee contributions
  • Payment of superannuation contributions linked to paid parental leave
  • Providing an ability for individuals to make catch up contributions when their account balance is low
  • Increasing the rate of the Superannuation Guarantee to 12% as soon as possible

At the moment, the only point that’s going to change from that list is the super rate which will reach 12% in 2025. The rest of the points above are being supported by women’s rights advocates and groups like the Equal Pay Day Alliance, but as these recommendations were published late 2017, there’s currently no definitive word on progress. But we’ll keep checking back.

What Is Virgin Money Doing?

We want to help out wherever we can, so Virgin Money Super has implemented important revisions to our superannuation plans in offering to provide support to working women.

These include:

  • Offering one of the lowest fees in the market
  • Automatic death and total disability insurance
  • The ‘baby break’ fee reduction for a period of up to 12 months while you’re on parental leave
  • Complete control of your investment options.

Also, we’re jargon free. Virgin Money break down the knowledge barrier, so you don’t need a finance degree to understand your options.

With clear, simple and effective super advice available at no extra cost, you can take control of your superannuation and plan your future with confidence.

Important Information

This information is of a general nature only and does not take into account your personal financial situation, needs or objectives. Please consider your own personal financial circumstances and consider the Product Disclosure StatementProduct GuideInsurance Guide and Financial Services Guide before taking any action in relation to your superannuation, making a contribution, or asking your employer to contribute to Virgin Money Super for you. You should consider the suitability of superannuation and Virgin Money Super’s Product Disclosure Statement before making a decision on your superannuation investments, making a contribution, or asking your employer to contribute to Virgin Money Super for you. For further information about the insurance options refer to the Insurance Guide.

It is very important to note that superannuation is generally a long term investment. Past investment performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a fund.

Before you rollover or consolidate your superannuation, you should check to see if insurance or other benefits will be impacted or lost. Some funds may also charge withdrawal or exit fees. You should consider the relevant Product Disclosure Statement. Please note this information does not constitute personal financial product advice, and you may wish to consult your financial adviser before making a decision about whether Virgin Money Super fits your objectives, financial situation and needs.

If you are considering making voluntary contributions into your Virgin Money Super account, you should consider your personal circumstances, the impact of such contributions to your contribution caps, as well as associated taxation issues before making any decision on making voluntary contributions. Concessional tax rates do not apply on contributions which exceed government contribution limits. See the ‘How Super is Taxed’ section of the Virgin Money Super Product Guide and the contribution fact sheet on our website for more information about contribution types and limits.

Prepared by Virgin Money Financial Services Pty Ltd ABN 51 113 285 395 AFSL 286869 (‘Virgin Money’). Virgin Money Super is a plan in the Mercer Super Trust ABN 19 905 422 981. Virgin Money Super is issued by Mercer Superannuation (Australia) Limited (MSAL) ABN 79 004 717 533 AFSL 235906 as trustee of the Mercer Super Trust. For more information about Virgin Money Super, please refer to the PDS which is available free of charge on our website or by calling the Customer Care team on 1300 652 770.