The gap starts out small and widens progressively as the power of compounding interest takes effect.

The reason why this occurs is a complex mix of systemic and workplace issues such as the gender pay gap, unpaid caring work, part-time work and even a bit of financial literacy.

Superannuation grows in three key ways; by employer contributions, extra member contributions, and through the power of compounding interest where investment earnings are reinvested to boost super savings. Unfairly for women they’re generally disadvantaged on all these fronts.

Because employer super contributions are paid as a percentage of wages (11% of wages from 1 July 2023), women who earn less than men will generally receive less super. Women are also likely to have far less disposable income to make extra contributions. When both these issues occur early in a woman’s working life, there is less super to benefit from compounding. Women also do more unpaid caring work than men – be it caring for kids, elderly parents or even a spouse. This is unpaid work so doesn’t attract employer SG.

The impact of all these issues on women’s retirement savings is evident when we examine the balances of TelstraSuper members.

The savings gap between male and female TelstraSuper members at age 30 is about $10,000. While this is a significant difference, it’s not really life changing.

Fast forward to age 60 and the median super balance for TelstraSuper male members is around $450,000 - almost double that of female members of the same age, who have a median super balance of $249,000. On a positive note, female members at TelstraSuper generally have far higher balances at age 60 than most Australian women, with the median balance across all women aged between 60 and 64 being just $137,000.

But there is nothing positive about the gender savings gap at our fund, or indeed at most others. The difference of this additional $200,000 can significantly impact yearly retirement income for many years, particularly when combined with the Age Pension.

This gender gap is not unique to our fund. Many funds – particularly those with high numbers of employees in lower paid caring occupations such as nursing or teaching – have females with significantly lower super balances than the median male.

Your fund matters

In super every dollar counts, so it’s important to consider the growth that the fund is providing in returns once the fees and costs are taken out - this is known as the Net Benefit.

For example, according to the Net Benefit modelling by SuperRatings in June 2022, if you’d joined TelstraSuper 10 years earlier with $100,000 invested in the Growth option and a starting salary of $80,000, you’d be approximately $16,000 better off than the median super fund and approximately $35,000 better off than the median retail fund.

For the Balanced option you’d be approximately $15,000 better off than the median super fund^ and approximately $39,000 better off than the median retail fund^{^}.

Many members are now also considering the financial education programs offered by their fund. This can include webinars, seminars, advice over the phone or in person. This is because the confidence to take simple steps like consolidating duplicate super accounts, picking the right investment option and the right level of insurance can all help lead to a better retirement outcomes.

Steps for a better balance

While the super gender gap is a result of many factors, there are a few steps members can take to help minimise the impact.

help minimise the super gender gap

 

^{^} Net Benefit modelling performed for TelstraSuper by SuperRatings as at 30/06/2022. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns. You can read all the applicable assumptions here.

Any general advice in this publication has been prepared without taking into account your objectives , financial situation or needs. Before you act on any general advice provided in this publication you should consider whether it is appropriate to your individual circumstances. Before making any investment decision, you should obtain and read the relevant product disclosure statement and target market determination which is available on the TelstraSuper website: www.telstrasuper.com.au