Why Super Can't Be 'Set And Forget' For Women

Like many Australians, Ivy Huang is just not that into her super.

"It's definitely a low priority when it comes to my attention," Huang says.

"Superannuation is one of those set-and-forget things. You only get reminded of it when you get sent a letter and if the performance is better than my savings account that's enough, even if the returns aren't exactly blowing my mind."

The 29-year-old Australia Post worker from Melbourne has her super in Westpac-owned BT Super. She has been with BT Super for 10 years after switching to it when she started her "first real job with an oil company". It was the default fund of the oil company.

She decided to stay and not go with the Australia Post default fund because she felt it was producing good enough returns, although not the best returns in the market.

"I think there was once a time when my fund wasn't doing so well, so I changed the investment mix, and it's done better since," she says.

Millions of women are missing out on thousands of dollars in investment earnings because they are not in the best performing funds, according to analysis of data prepared by SuperRatings.

Super fund performance matters for everyone but particularly women because they retire with 30 per cent less on average than men, according to the Bureau of Statistics.

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"Women could be doing better, but because retirement is often so far away, it's not front of mind for many people," HLB Mann Judd wealth manager Lindzi Caputo says.

Figures from SuperRatings suggest that of the top 10 performing balanced indexed super funds over the past 10 years, only four are also in the top 10 for having the highest female membership.

This means that about 3.2 million women in the six funds with the highest female membership are missing out on superior returns, notwithstanding many more who are in smaller funds.

Adding to the gender gap in super savings is the fact there are also more men in the top performing funds.

This is despite REST being the top performing fund over the decade. It represents largely retail workers, of which 60 per cent or 1.78 million are women.

The REST Core Strategy Fund returned 6.1 per cent a year in the 10 years to May 31, 2017, compared with a median return of 4.9 per cent. The period includes the global financial crisis, so the 10-year average for all funds is set to improve over the next few years.

SuperRatings research manager Kirby Rappell says the percentage difference in returns can equate to thousands of dollars.

"Assuming a $50,000 starting balance and excluding the impact of any contributions during the period, the REST Core Strategy, would have provided $6335 more over a decade than the median balanced fund," Rappell says.

"The gap between the best and worst balanced fund is more stark, with this difference being $24,655 over the decade."

The average super balance for women when they retire is about $150,000 less than the average for men, according to the Association of Superannuation Funds of Australia.

Average super balances at retirement today are $138,150 for women compared with $292,500 for men.

Morningstar Research found that of the balanced funds that it surveys, which have a mix of 60/80 per cent growth assets, the biggest underperformers were BT Active Balanced, AMP Active Growth, OnePath Managed Growth and Optimix Super-Balanced.

AustralianSuper Balanced, HOSTPLUS Balanced and UniSuper Accumulation Balanced are among the top performing funds with the highest female membership.

Together they have returned about 6 per cent a year for about 1.6 million women over the past decade.

The country's biggest super fund, AustralianSuper, represents only 39 per cent women compared with 61 per cent men.

The best performing male-dominated fund with 92 per cent men, is Cbus, which returned 5.8 per cent a year in the 10 years to May 31.

The data used in the SuperRatings top 10 balanced indexed funds was examined because it is the type of investment option where most Australians are invested. It reflects a mix of 60/70 growth assets.

Of the 10 funds with the highest percentage of women, MyLife MyMoney fund by Catholic Super, was the only one to rank among the top 10 best performing balanced funds by SuperRatings.

This fund consists of 71 per cent women and returned 5.5 per cent a year over the past 10 years.

The funds with about 80 per cent female members include Guild Retirement Fund, QIEC Super, HESTA Super fund and Australian Catholic Superannuation fund.

Performance data is not available for all of these funds due to them being new funds with the exception of HESTA and Australian Catholic Superannuation, which returned 5.4 per cent and 3.5 per cent respectively over the past 10 years.

Over the past eight years, most superannuation funds have posted positive returns.

In the financial year to May 31, the median growth fund returned 10.5 per cent, according to research company Chant West.

"We expect industry funds to finish the year ahead of retail funds by about 0.7 per cent," says Chant West director Warren Chant.

Research shows that both women and men are more likely to opt for the default super product recommended by their employer or industry they work in.

For instance, HESTA focuses on health workers and particularly nurses, who are predominantly women, while MTAA Super, which services the motor trades industry, has a high percentage of men as members.

Career breaks to have children and working in part-time jobs or positions that either don't pay well or have super at all, are commonly cited as reasons why women tend to retire with less than men.

This is why there is such a focus on the need for women to also do more improve the retirement savings gender gap by making better investment decisions.

"Starting behind men on super makes taking action even more important," AustralianSuper group executive Paul Schroder says.

"Simple actions such as choosing lower cost and better earning funds, can make a difference to women's balances, talking with others and highlighting the issue of super inequality will also help close the gap."

Bianca Hartge-Hazelman

The Sydney Morning Herald

19 July 2017

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