In modern Australia, our daughters and sons start their working lives on an even footing – well-educated and evenly matched in their expectation of what the workforce and life has to offer.
At 18, you’re pretty certain the future will take care of itself. But if your daughter could fast forward 40 years, we’d all be shocked by what she sees.
Despite a lifetime of working hard and caring for family, your daughter and most of her girlfriends will likely be among the 80% of single women unable to afford a comfortable life in retirement. In fact, more than a third of them, if single, will retire in poverty.
In other words, nothing will change in the next 40 years unless we move now to modernise our tax, pension and super systems to take the work patterns of women into account.
These systems, set up decades ago, reflect the unbroken, full-time, full-pay work pattern of most men. But while setting men up for a better retirement, a seismic shift in our culture has taken place.
Since the 1980s, wave after wave of educated female workers has swept into the labour market transforming our workforce and perspective about ‘a woman’s place’ in the world. While times have clearly changed beyond recognition, the old systems – and thinking – are yet to produce a retirement income policy fit for purpose in the 21st century.
This year, we have the opportunity to properly value the work patterns of Australian women and fairly reward their paid and unpaid economic contribution: a federal Parliamentary Inquiry is taking a deep dive into the issue, while super is centre stage in a serious debate on tax reform.
The scenario policymakers need to consider is this: no matter how organised, hard-working, educated, committed, experienced, loyal, intelligent, gifted or highly ranked a woman may be, her work pattern is likely to be interrupted and slow-tracked at least once, if not a number of times, by parenthood and family responsibilities. This is dictated by biological reality and social expectation, and remains a fact of life for the vast majority of Australian women.
This affects her earning ability, promotional prospects and is fatal to the long-term accumulation of super.
Add to this the lower pay attached to female-dominated industries such as nursing, education, childcare and social services compared with male-dominated industries – a sexist legacy from the not too distant past when women’s pay was deliberately set at a discount rate for a variety of spurious reasons by lawmakers.
Over a lifetime, these differences create a chasm in earnings and economic security between the sexes. For example, a woman with a bachelor degree will earn $1.26 million over her lifetime while a man earns $3.66 million. On average, the disparity creates a jaw-dropping 47% superannuation gap in retirement.
So how in 2016 do we shift historical baggage and re-design a system that reflects real life for 50% of the population?
At the top of the ‘to do’ list are some obvious changes, starting with tax concessions on super. These flow most abundantly to rich, older men in no need of government assistance whatsoever for a well-padded retirement, while an enormous number of working women not only miss out on any tax break, their super is taxed harder than their take home pay. It’s no surprise 70 per cent of single women receive the full age pension.
It’s unacceptable only around 33% of tax concessions flow to women and a more equitable re-direction must be part of this year’s tax reforms to provide a financial step up for millions of lower income workers.
A common misconception is that women can fall back on their partner for financial security in later life – based on outdated notions of the male breadwinner. Here are the unvarnished statistics: a third of women aren’t in relationships when they retire and on current projections 40% of couples won’t have enough to retire comfortably. Regardless, a woman’s right to financial security in retirement shouldn’t depend on her relationship status.
The government should also reverse the abolition of the Low Income Super Contribution, which largely benefitted women, and review recent negative changes to the age pension asset test. There must be no further freeze on super increases, which will substantially improve retirement income for future generations.
Much has also been said about lifting contribution caps so women can pour money into super. Unless you’re among the tiny number in the top income brackets, the idea that women have thousands to spare to top up their super is not a policy solution, it’s a fantasy.
In 2016 let’s bring on change to set things right. No Australian woman should be facing widespread economic insecurity in retirement - our daughters and their daughters deserve better.
This appeared in the Sydney Morning Herald on 3 March 2016.