Did you know that more than 80 per cent of women are currently retiring with insufficient superannuation savings to fund a comfortable lifestyle?
In fact, the average superannuation account balance for women when they retire is around $80,000 less than the average for men1.
There are a number of reasons why the super gap is so large, but it doesn’t have to be this way. By taking control of personal finances and pursuing greater financial independence, this may help women feel more confident to enjoy financial wellbeing today as well as in retirement.
Why is the super gap so large?
As we are constantly reminded in the media, there still remains to be a gender inequality when it comes to full-time earnings, with women earning 18% less than men2. This results in further disparity when it comes to employer superannuation contributions, known as super guarantee. Currently, employees receive a super guarantee contribution of 9.5% of their total salary earnings. If women are already earning 18% less than men, this gap is also transferred over to their super earned by employers.
Many women take an average of five years out of the workforce to care for children or family members, which can cause their super savings to stagnate and begin to fall behind2.
When women return to work, they are more likely to be in part-time or low-paid employment. There are an estimated 43% of women in part-time work2. The current 9.5% Superannuation Guarantee does not enable most women to accrue sufficient savings for a comfortable retirement.
An estimated 220,000 women miss out on $125 million of superannuation contributions as they do not meet the requirement to earn $450 per month (before tax) from one employer, as many women work more than one part-time job2.
The future of the working environment
REI Super’s insurance provider MetLife’s Employee Benefit Trends Study 2020 investigates the changing face of the Australian workplace landscape. Understanding how to improve employee wellbeing is key to helping employers navigate this new work-life reality. The study highlights that while employers are prioritising the mental aspect of their employee wellbeing, right now, financial health is the top concern for employees, and plays an especially important role in their overall wellbeing, and mental health in particular.
With many working remotely throughout 2020, it’s to be seen that employers are starting to adopt a position in which roles can continue to be worked remotely and flexibly, which could benefit women in the workforce who have family or caring
responsibilities. Some employers are also offering expanded parental leave schemes.
These types of workplace changes will help create a positive culture, where employees can confidently feel they can access these types of initiatives to maintain a work-life balance, increase productivity and not compromise their careers and finances, thus alleviating a superannuation gap.
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Disclaimer: The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129. January 2021.