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What’s the deal with women and superannuation?

a woman in plaid blazer using her laptop
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This is a sponsored blog post brought to you by Super-Rewards: Grow your super with your everyday spend.

Why do women retire with less superannuation?  And what can women do about it?

Recently, I interviewed Pascale Helyar-Moray, CEO and Founder of Super-Rewards, on The Joyful Frugalista podcast, where we talked about women, gender equality and superannuation.  With women over 55 the largest cohort experiencing homelessness in Australia, it’s important to talk about money and how women are impacted by differences in income.

The Gender Pay Gap

Women earn less than men. In fact, according to research, Australian women earn around 22 per cent less than men (when things like overtime, bonuses etc are considered).  That’s around one-fifth less than men on average.

According to Helyar-Moray, the gender pay gap is measured not at the dollar-per-hour difference between men and women working in the same industry but by gender participation in a sector. So, for example, in certain sectors, such as financial services, the gender pay gap is high because there are more men than women.  In contrast, the gender pay gap in healthcare is low because so many women are working as nurses or in other roles in healthcare.

Many of us, especially women, know from personal experience that women usually earn less than men, and the 22 per cent figure does not surprise us.  But amazingly, there are still people out there who think that the gender pay gap is a made-up lie. This is something that Helyar-Moray knows firsthand from her former work managing the communications for the not-for-profit organisation, the Australian Gender Equity Council, where she frequently deals with comments made by trolls who believe the gender pay gap is fiction. But that’s not the only problem with the gender pay gap: it also impacts women when they retire.

Gender Super Gap

While many academics are focused on the gender pay gap, Helyar-Moray believes it hides an even greater problem, one she terms the gender super gap. Simply put, women earn less money and therefore put less money into superannuation.  ‘I’m not saying the gender pay gap is wholly and solely the cause of the gender super gap,’ Helyar-Moray said. ‘But it is one of the components.’ 

Women are now retiring with around half the superannuation as men: despite the fact that women, on average, live longer.  The average Australian woman now has roughly enough superannuation for around six years of retirement living – but then lives another 14 years after that.

She also notes that a contributing factor is that women are more likely to work in a part-time role than men.  And a big issue when it comes to growing superannuation for women is that approximately 40 per cent of women aged 18 to 64 are not in the workforce. Yes, you read that right, 40 per cent of women are not in the workforce at all at a particular time and, therefore, unlikely to be putting as much, if any, money into their superannuation. During the accumulation phase of their life, there are periods when they are not working because they are having children or caring for others and therefore not contributing much, if at all, to superannuation.

Pre-COVID, on average, women held around half – 56 per cent – of the amount of superannuation that men did.  Helyar-Moray noted that post-COVID figures about the amount of women’s superannuation have not yet been released. More women than men were impacted economically by COVID, including women working in affected sectors such as retail and childcare. And more women than men withdrew money from their superannuation during 2020, which may have further negatively affected their super kitty.

Superannuation was not designed with women in mind

Most women that Helyar-Moray speaks to are shocked to learn that superannuation did not consider women’s work/life patterns, even though women are still expected to do more unpaid domestic work.  ‘Women say to me, “What do you mean no one else is thinking about this? Like why? Why hasn’t this been calculated and taken into account?”’ she said. ‘I speak to the realization that the super system is inherently – and has always been – one-sided in favour of men’s work-life patterns.’

I remember getting my first full-time job in 1993. At that time, employers were still adjusting to having to pay superannuation. I didn’t think much about super then; it all seemed so far away.  I didn’t even think about needing time out of the workforce to have kids, let alone getting old. I figured I would be a superwoman and have a fabulous career. But 30 years on, as I approach retirement (thankfully with good superannuation), I am shocked that no one considered that work patterns and life expectancy for women are radically different from men. Why wasn’t the economic impact on women factored in? Did early policy planners think that there were only men in the workplace or that if women worked, they would never have children?

The flawed assumptions about retirement

When it comes to the amount you need to retire on, Helyar-Moray said that basic estimates are for $30,000 a year ‘just to keep the lights on and eat baked beans’. Meanwhile, the average woman dies at 85, so if she retires at 65, she will need enough money to survive in retirement for twenty years. Using back-of-envelope maths most women will need roughly $600,000 to self-fund their retirement. Yet most women don’t have anywhere near this amount.

Not only that, but the $30,000 a year estimate of what you need to live on in retirement assumes home ownership. Yet not all women own their own homes. In fact, it wasn’t that long ago that women couldn’t easily get a home without a partner.  As a nation, we are also experiencing record-high property prices and the problem of women over 55 being the most vulnerable to homelessness.

Super startup

‘Increasing numbers of women are moving into homelessness because of this deficient system, and yet no one is doing anything,” said Helyar-Moray.  She realised that relying on women to earn more to contribute more to super wasn’t the right way to go, especially as the HILDA report (Household Income Labour Dynamics of Australia) showed that women were increasingly doing more at home and struggling to re-enter workforces after having children. The value of all of this unpaid work amounts to around $2.2 trillion to Australia’s economy every year.

‘Why is the government and industry telling women that to solve their issues, they should just top up? Show me the money tree that they’re going to top up their super with, and I’m going to show you a liar because it doesn’t exist,’ she said.

Helyar-Moray drew on her experience with eCommerce and startups.  ‘I thought, we just need to bring affiliate marketing to superannuation so that every time I buy pet food, kids clothes or whatever, then I’m being rewarded into my super for doing so.’ Thus Super-Rewards was born.

It works because Super-Rewards has a relationship with 500 of Australia’s leading online retailers, including Catch, eBay, Apple, the Iconic and Energy Australia.  As a consumer, you can sign up for Super-Rewards for free.  When you spend money with any of those participating retailers, they pay a portion of your purchase to your super account.  So, for instance, say you spend $100 at Country Road, $4 of that purchase will go into your Super-Rewards account.  ‘Effectively, Country Road pays Super-Rewards a commission right for directing traffic and sales, and we share that commission with the user,’ said Helyer-Moray.  ‘You’re still on the Country Road or Big W or whatever website. You can still buy things on sale. You can still earn Country Road rewards,’ she said.  Further, you can also earn rewards through in-store purchases. That means that if you do your weekly shopping, pay for your dry cleaning or stop and have a coffee, these costs could earn you rewards.

Women may earn less, but we spend more. On average, women make up to three-quarters of consumer purchases: think about who does the Christmas present shopping in most households. That means that by using Super-Rewards, women can boost their super by thousands of dollars every year just by doing everyday things.

Keeping superannuation alive

With women often taking time out of the paid workforce, a secondary problem is keeping their superannuation accounts alive.

The Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 (aka PYS legislation) set out that when an account has been inactive for 16 months, it will be consolidated by the Australian Taxation Office.  These changes were made because of the problem of fees being charged on inactive accounts. 

What this means for women is that if they go on maternity leave for two years and haven’t done anything about their superannuation, the balance could be retrieved by the ATO. It stops the fund from eroding through fees, but at the same time, it also stops it from growing – it’s just ring-fenced and put to the side.

Another part of the PYS legislation is that insurances associated with super, e.g. life insurance, become inactive.  Helyar-Moray says you never want to find yourself in a situation where you think you’ve got life or other insurance through your superannuation, but you don’t.

The good news is that if you contribute to your superannuation through Super-Rewards, that ensures that your superannuation stays active and continues to grow – and that any insurances you may have with your superannuation also continue to grow.

Now on an app

Super-Rewards is easy to set up and access on your computer. And it now has an app so that you can use it when purchasing anywhere, anytime.

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