Even if we close the gender pay gap, workforce spells and lost compound returns will see women continuing to retire with much less super than men, a new analysis of official data reveals.
In a first of its kind, Industry Super Australia special adviser and former Treasury retirement modelling head, Phil Gallagher, uses the latest ABS data to plot both pay and superannuation gaps by age and salary.
Comparing all workers of the same age with the same income, Gallagher reveals that while the super gender gap emerges at 14.6 per cent at age 25-34, it peaks at the cusp of retirement, with men aged 55-64 saving 47.4 per cent more.
To tackle this, Industry Super is calling for super on parental leave; and the monthly $450 Super Guarantee threshold which impacts hundreds of thousands of women working part time or casual, to be scrapped.
Industry Super head of consumer advocacy, Sarah Saunders, says the findings underscore the toll of interrupted work patterns and lost compound returns on women’s retirement savings.
“While a woman might return to a good salary after time out to care for a child or an ageing parent, she will have little chance of ever making up the super shortfall,” says Saunders.
“That women today face thirty years in retirement with half as much super as men – because the system doesn’t put an economic value on unpaid care - is unacceptable”.
“Business and government policy must better reflect how women transition in and out of paid employment. Examples include flexible working hours, more accessible childcare, and super on parental leave and casual or part time work”.
“The super shortfall highlights the importance of ensuring that the Age Pension safety net keeps pace with living standards by continuing to link it to wages rather than CPI,” she said.
The 2015-16 ABS Survey of Income and Housing shows the median super balance for a 55-64 year old man was $166,339 - for a woman it was $96,011. In 2015, more than two-thirds of Australia’s 2.7 million unpaid primary carers were women (Carers Australia). The calculated replacement value of unpaid that year was over $60 billion.
The Industry Super ABS data analysis shows:
- The gender super gap for all fulltime workers aged 20 to 64 is 32 per cent.
- The gender pay gap for all full time workers aged 20 to 64 is 20 per cent.
- The full time worker gender pay gap increases with age, possibly reflecting continuity of employment
- The super gap gets larger from age 40, possibly reflecting women’s re-entry to the full time workforce
- The super gap for women working full time gets bigger nearer retirement, possibly reflecting the cumulative pay gap
- The super savings gap between women and men aged 25-34 on the same salary is 14.6 per cent.
- At retirement age, the super savings gap between women and men on the same salary is 47.4 per cent.
Media contact Phil Davey 0414 867 188
Industry Super Australia provides policy, research and advocacy on behalf of 16 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of six million Australians
Industry Super Australia Pty Ltd ABN 72 158 563 270, Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514
Analysis of Super Gap and Pay Gap
The pay gap is the ratio of the difference in the average ordinary time wages of men and women divided by the men’s wage ([M-F]/M). This is a concept for full-time workers because the hours are comparable. The ABS Survey of Income and Housing unit record file for 2015-16 is used here to construct both super and gender gaps. Table 1 shows the trend by age for full-time workers.
|Table 1 Full-time workers aged 20-64 from the 2015-16 ABS SIH|
|Age of person||Super Gap||Pay Gap||Ratio||Total Gap|
|20 to 24||9%||5%||1.8||13%|
|25 to 29||12%||9%||1.3||21%|
|30 to 34||5%||12%||0.4||17%|
|35 to 39||1%||13%||0.0||14%|
|40 to 44||18%||21%||0.8||39%|
|45 to 49||27%||20%||1.4||47%|
|50 to 54||32%||27%||1.2||59%|
|55 to 59||38%||25%||1.5||63%|
|60 to 64||40%||25%||1.6||65%|
The pay gap for full-time workers increases as they get older, possibly reflecting continuity of employment. The super gap gets larger from age 40, possibly reflecting women’s re-entry to the full-time work force. The super gap for women working full-time gets bigger as they approach retirement, possibly reflecting the cumulative pay gap.
Another way of looking at the super gap is the compare the pair comparison – same age, same income.
Table 2 does this for both full and part-time workers. Female employees aged 25-34 may have more super than their male counterparts, but as women get older the income group will have lower super savings.
|Table 2 Gender Gap in Superannuation saving by age and employment income|
|Source: ISA analysis using ABS Survey of Income and Housing||Age of person|
|25 to 34||35 to 44||45 to 54||55 to 64|
|Annual employee income including salary sacrifice||Gender gap in superannuation saving||Gender gap in superannuation saving||Gender gap in superannuation saving||Gender gap in superannuation saving|
|$1 up to $24,999||-18.4%||33.6%||28.7%||38.4%|
|$25,000 up to $39,999||12.3%||-13.5%||24.7%||31.6%|
|$30,000 up to $39,999||-22.6%||8.2%||13.8%||10.6%|
|$40,000 up to $49,999||15.8%||-7.8%||13.1%||22.1%|
|$50,000 up to $74,999||-17.1%||-9.3%||5.1%||10.8%|
|$100,000 up to $149,999||11.2%||1.3%||9.2%||32.6%|
|$150,000 and over||*||-20.6%||5.9%||*|
|* Insufficient cases for reliable estimate|