Australian women retiring today are finding themselves at a major disadvantage when it comes to their superannuation balances. But it’s never too late to play catch up, says Melinda Howes, general manager of superannuation at BT Financial Group.
“There’s currently a 42 per cent gap between men’s and women’s super,” Ms Howes told a recent Sky News Business/The Australian Money Talks panel.
“Men are retiring with about $270,000 compared to $157,000 for women.”
There were a few reasons for this super gap, Ms Howes explained.
“The first is the gender pay gap, and that’s at around 22 per cent at the moment,” she said.
“Some of that is because women tend to work in some of the lower-paid industries, such as nursing and teaching.
“Secondly, women tend to be the primary carers more often than men, so women have broken work patterns; we take more time out of the workforce, so obviously in those years we’re not contributing to our super.
“And thirdly, the super system isn’t yet mature. We’ve only had compulsory super since 1992 and it started at just 3 per cent, so women retiring today have not had super for their entire working lifetime.
“Prior to compulsory super some people did have it, but they tended to be senior executives and they were mostly men.”
Sally Loane, CEO of the Financial Services Council, said her own experience has led her to champion women becoming more engaged with super.
“Twenty-five years ago I was having my first child,” she said. “I was a journalist, I was putting 3 per cent into my super fund and I was thinking, ‘Why am I doing this? This is ridiculous’. I didn’t engage with super, I resented it; I didn’t concentrate on it. That means that today I haven’t got enough super.
“So I’m one of those women from that generation who says I will not let my daughter, my nieces and all of their friends go the same way.
“I’m really passionate about educating young women in their 20s, or even earlier — from the moment they get their first pay packet in paid work, engage with super, do something about it.”
As the super system matured there would be more women who had held super for their entire working lifetime, which should help close some of the gap, Ms Howes said. But for women retiring today, it’s crucial to engage with super, even if they haven’t done so until now.
“Sixty cents out of every dollar of retirement income you get is from earnings you make when you’re in retirement,” she said. “So even for someone retiring now, or someone who is close to retirement, it’s not too late to sort your super and make sure it’s invested to give you that.”
Ms Loane agreed, saying it was critical for women to take an interest in their super and play catch-up.
“There’s a great saying: a man is not a financial plan,” she said.
“So from the very first pay packet women need to be financially independent.”
James Kirby, wealth editor at The Australian, said there was no reason women shouldn’t be just as engaged as anyone else — or even more engaged if they know that for the generations before, the system was set against women.
“It’s your money,” he said.
“I’m amazed at how people don’t grasp that.
“It’s yours — even if it’s in a big fund, it’s yours to move around, to reshape and to choose what to do with.
“And ultimately one of the things we do in The Australian is promote the notion of self-managed super, or even just self-directed super — that it is yours to manage.
“So that’s very important to keep in mind.”
Taking control of your super can be a daunting prospect, but some very simple steps can have a big impact.
“What we’re doing is finding ways to help all members, especially women, engage with their super,” Ms Howes said. “There are a couple of simple tools that our members have really responded to. One is super check — which helps them find all of their super very easily through their banking site or through the BT website.
“That’s the first step, to know where it all is, get it all together, get it sorted.
“The other tool is an online wealth review. We’ve used it with all our customers and have had a fantastic response rate. It just helps people get a picture in about 10 minutes of their entire wealth situation and it gives them a bit of a report that shows them maybe where they need to pay a bit more attention, and if they choose to they can get some support.”
Making sure your super fund has your tax file number and your contact details was another really simple step that could save a lot of money in the long run, Ms Howes said.
“If the fund doesn’t have your TFN you’re going to be paying penalty rates of tax — and there are quite a number of members who don’t have TFNs. There are billions of dollars in lost super, just sitting there.
“The last thing I’d say is if you can afford to — and I know a lot of household budgets are very tight — but if you can afford to, put a little bit extra into your super, particularly in those early years before you start having a lot of expenses around the home, family and those sorts of things. That can be really beneficial.”
By The Australian
20 June 2018