Women – we don’t fit into Australia’s old-fashioned model of super

By Sally Loane

Twenty-six years ago compulsory superannuation was launched; designed for and delivered by the trade union model of the full time working male. All these years later it is still rigidly the same, failing in its job to cater for contemporary working lives, and failing, most spectacularly, working women. This is a fundamental flaw of our superannuation system and the problem is not going away.

Commentators argued the toss last week about Grattan’s findings on retirement adequacy, but it is still the same imperfect, inflexible, male-centred model. If we truly want better retirement outcomes for all Australians, and particularly for women, why don’t we agree to a new, modern, fit for purpose one?

Startling new research for the Sydney Community Foundation, being launched today by Lucy Turnbull AO, shows that financial insecurity for women in our largest city, Sydney, is dire. The Sydney Women’s Fund research has found that a lack of financial security is an emerging crisis, with only 11 per cent of Sydney women confident they can finance their future with retirement funds. One in three women surveyed said if their relationship broke down they would be at-risk financially. Almost half said they were struggling or just getting along; while this same proportion earns less than $34,000 a year.

Given these numbers, is it any surprise that the fastest growing group of homeless people in Australia are women over 55? If this is the situation in our largest and most affluent city, it is likely to be mirrored across other Australian communities.  If we are to have any hope, in the policy sense, of assisting all women to achieve financial security and adequate retirement savings, and give them at least equality with men, we need more than the basic Age Pension, as championed by the Grattan Institute in its recent report.

Retirement adequacy is not just a lump sum number to toss about as the perfect amount to retire on. It’s about social context. If women are financially secure, the economic security of an entire community is in better shape – women, as the Sydney Women’s Fund study reports, invest 90 per cent of their income to support family and grow community, compared to 30-40 per cent by men.

For women, the wealth gap starts when we get our first jobs in our 20s, and grows into a yawning chasm over the next 40 years, thanks to broken work patterns and stretches of part-time work.

There are several small levers we can use to help close the gap for women, including removing the anti-discrimination barriers so enlightened employers (and there are several) can pay women a higher superannuation guarantee (SG) rate than men without having to seek legal relief. Another is to continuously pay the SG when staff (male and female) take parental leave, again, something that several enlightened employers, including the FSC, now do.

The Senate Economics Reference Committee’s report, 'A husband is not a retirement plan’, went some way to suggesting changes on superannuation but more needs to be done to ensure these are implemented.

One of their main recommendations to boost women’s retirement savings effectively is to increase the SG to 12 per cent, which is FSC policy. We cannot ignore this recommendation if we are to change the narrative on women’s economic security. Raising the SG is about closing the savings gap between subsisting on the poverty line and living more meaningfully in retirement. It’s ensuring that the single retired woman doesn’t have to merely subsist on the age pension, simply because her marriage ended in her 50s or because she was on the wrong side of the pay equity gap.