It is a disturbing fact that the vast majority of Australian women do not have enough superannuation savings to live a dignified retirement.
With an average 53 per cent of the super savings of men, many women are extremely vulnerable at retirement, particularly the one in four who are single and approaching retirement age, many of whom are separated after dedicating large parts of their life to care-giving.
Over 70 per cent of women have estimated balances under $150,000 and almost a quarter have balances less than $50,000. Meanwhile, one in four men have balances over $500,000, compared with one in 25 women.
The Australian Services Union commissioned a report last year into this problem and the stories of helplessness from women we interviewed were heartbreaking. One woman reflected the sentiment of many: "I expect to be poor, I may become functionally homeless."
Labor’s announcements this week to pay super to those on parental leave and make it easier for employers to contribute more to women’s super accounts are part of the solution.
But there are more fundamental issues with the superannuation system and the problem is too urgent and immediate for delays and the phase-in periods envisaged in Labor’s policy.
The most fundamental issue is the delay to the increase in the superannuation guarantee, which has been stuck in the mud at 9.5 per cent.
Super was set to increase to 12 per cent by July next year until the federal government delayed implementation to 2025, costing us tens of thousands of dollars at retirement.
This was our biggest hope to bump-up women’s retirement savings and it has been squandered by politicians intent on pandering to the business lobby.
Companies can afford to increase super contributions to their workforce given their wages bills have flatlined. Whereas wages grew at an average 3.5 per cent from 1998-2012, they have not increased materially in real terms since 2014, with current real wage growth now at zero.
Companies haven’t seen their wages bill increase in years and with profits rising they can afford to pay more super to their workforce – now is the right time to take the brakes off super and increase it to 12 per cent by 2022 – three years ahead of schedule.
The fact that employers can avoid paying superannuation to those earning less than $450 in a given month or not classed as an employee is another injustice in our super system that clearly discriminates against women who dominate the casual and part-time workforce.
While Labor’s initiative to remove this antiquated policy is well intentioned, again there is no reason to delay the reform. It will cost little for employers yet provide much-needed additional super for the majority-affected female workforce.
A recent survey by Galaxy Research found 76 per cent of Australians thought that those earning under $450 per month from a single employer should earn superannuation on their income. Only 16 per cent disagreed. The community are clearly ahead of the politicians on this issue and it is time our Parliament caught up with public sentiment.
Perhaps the toughest issue to confront is that even with these accelerated improvements to the super system, many women will still retire in poverty. That’s why the report we commissioned last year recommended tracking all superannuation balances in order to intervene for those who are falling behind an acceptable accumulation pathway.
Such interventions could include government top-ups to stop the pathway to poverty in retirement, tax relief, superannuation account fee discounts and the inclusion of a superannuation component in Family Tax Benefit B.
Women in Australia have endured an unfair superannuation system for far too long and it is time we got on with rebalancing the system. The time for phase-ins, delays and prevarication on super reform is over. The longer we stall, the bigger the problem becomes.
By Linda White (assistant national secretary of the Australian Services Union.)
The Sydney Morning Herald
19 September 2018