Reading time: 5 minutes
Tracey Spicer talks to Cate Wood, Chair of Women in Super about some of the ways that super policy works against women, and how COVID-19 may widen the super gender gap.
Hi, I’m Tracey Spicer. A fascinating report has recently been released called The Herstory of Superannuation. That, of course, is her story instead of his story. It was conducted by think tank Per Capita and commissioned by Women in Super, whose chair, Cate Wood joins us now. Hi, Cate.
SuperGuide Premium is ad-free
What are the main findings of this research?
Well, the research really strongly demonstrates that compulsory superannuation, which was introduced in 1992, has been of great benefit to women in terms of giving some boost to their retirement savings and it really contrasts to how discriminatory superannuation was before Universal Super, how few women had super and also the improvements that have been made.
We thought that was important because there are problems with the system, as we all know, and women are retiring with less super than men. But you don’t want people to get to go down the path of throwing the baby out with the bathwater. And we thought it was really important to demonstrate what a big contribution compulsory super had made.
It’s important to remember the lessons of history, isn’t it. I remember times predominantly during the Whitlam era when a gender lens was applied to policy. Why doesn’t that happen any longer?
Compare super funds
Well, it was happening, the Abbott government stopped playing a gender lens and during a sort of budget review, looking at the impact on women, and I think it’s just such a step backwards that you just do not see changes the impact they will have on women. They appear not to be discriminatory, but the outcomes are quite different for women. And if you don’t do a gender analysis, you don’t see that.
We know about the gender pay gap in superannuation. We’ve known for quite some time. How has this changed because of the pandemic and how do you foresee it will change even more down the track?
Yes, it’s interesting. There’s a number of challenges. Women in Super have been arguing for changes to super for years and lobbying and advocating for those. And we’ve wanted to close sort of holes in the system where women don’t get any super still. So there’s an earning threshold you have to meet in a month. And a lot of women having multiple part time jobs means they miss out. The government paid parental leave scheme doesn’t have super attached with it, even though that was envisaged when it was brought in.
And of course, there’s the situation where some employers just don’t pay what they should pay. So there’s a lot of holes in the system.
But big contributors to women having less are around two things, which is how much women earn and when that money goes in, because the magic of super is compound interest earned over your lifetime. And the other one that really compounds that whole situation are the tax concessions on super. And they as a flat tax, it really benefits high income earners. It provides nothing to low income earners. And half of all women who work would fall into that definition. So they’re not getting a pat on the back and a boost from the government out of saving for their retirement.
So we think those things need to be addressed now. You look at COVID-19 and the introduction of the early release of super, which is really predominantly for low income earners and young people who are so impacted and challenged by the current covid pandemic, forced them to look after themselves by accessing their superannuation. And for women like it, predominantly under thirty five year olds are the majority of applications.
And because women have lower balances to start with, they have cleaned out more of their balance by making applications for the early release of Super. And you put that. Women around 30, 30 to 35, a lot have gone back to zero balance, and that is right when they marry and take time out of the workforce to have children, be more likely to have a period of time where they’re working casual or part time.
So their ability to make up that money they’ve taken out and the fact that that balance isn’t there earning interest over all of those years really is going to have a severe impact on a lot of women.
The issues are multifaceted and that’s clear reading the report, however, the assistant minister for superannuation, Senator Jane Hume, is not too keen on gender specific policy ideas, such as increasing the super guarantee for women to a higher rate. What are your thoughts on responses like that?
You’re just not going to fix the problem. Like it has been a tendency of conservative governments when looking at what they can do for women, acknowledging that there’s a difference in super balances right over the last 20 years to introduce measures, discretionary measures. So the opportunity for women to do something for themselves. And those things are helpful to some, but they’re not helpful to the vast majority of women who don’t have the income capacity to make additional contributions that are significant.
So the co-contribution for example, does provide an opportunity for low income women to put something themselves and get a boost from government. One sixth as many women do that as get the low income super contribution, which is an automatic tax refund on super. So it just shows that difference. And also, I mean, a lot of us are very unhappy with discussions around women’s financial literacy. If you want steam to come out of my ears, I’m all for women being more informed and having more information and assistance.
But it is insulting. And in fact, the research that we’ve had done of a lot of industry super fund members demonstrates that women make choices for how they invest as much as men. So it doesn’t demonstrate great differences between men and women. And really telling women to get smart and fix the problem when the policy settings are against them is just not fair.
Some economists say that if the country goes ahead with this 12% increase in the superannuation guarantee by 2025, it will reduce or slow wages growth when we need the money right now. What’s your message to the government on that?
Look, the 12% is really important and more important post-COVID to help people increase their super balances. And there is no evidence, frankly, that a delay in the super going to 12% will increase salaries or lead to more jobs. The last time when the Abbott government deferred it, in that period of time there has been no increase in income, but people have lost tens of thousands of dollars of their retirement outcomes by virtue of those increases not going ahead.
The evidence is just not there. And there is no guarantee. There is a guarantee of those increases if they’re applied. There’s no guarantee of a salary increase at all.
All right, Cate Wood, thanks so much for your time today.
Thanks a lot. Tracey.
Boost your retirement with a SuperGuide Premium subscription
SuperGuide Premium is your independent expert on superannuation and retirement planning. Learn how much super you could need, what are the best performing super and pension funds, how to run an SMSF, the latest super rates and thresholds, contributions guides, and super rules and strategies.
Includes performance rankings for 235 super funds and 166 pension funds, more than 600 articles, how-to guides, checklists, tips, calculators, case studies, quizzes and a monthly newsletter.