It's never too late to get ahead of the super gender gap
November 20, 2019
New research shows that older women are contributing more to their super than men, here’s why it matters.
From longer life expectancies to time away from work for caring commitments (whether that’s ageing parents or having children), women on average retire with around half the super than men. We call this the super gender gap.
But new analysis from Rice Warner* has found that women are making an active effort to close the gap through contributing extra to their superannuation. This analysis shows that the average voluntary contribution by females is typically higher than that of men in a similar age cohort, and markedly so closer to retirement.
How’s the gap occur in the first place?
Generally, you are only paid super while you’re in paid employment, so time away from the workforce, for example, to have children or care for elderly parents can have a negative impact on your super balance. Whilst these factors still predominately affect women, they will also affect men who take on these roles.
There are also laws in place that mean if you’re earning less than $450 (before tax) a month, your employer doesn’t have to pay you any super. This often affects women who return to work on a part-time or casual basis. It also means that people who work for multiple employers, but don’t earn more than $450 (before tax) from each one, are missing out.
Estimates from the Association of Superannuation Funds Australia (ASFA) show that around 220,000 Australian women and 145,000 Australian men are missing out on around $125 million of superannuation contributions each year due to not satisfying the $450 monthly earnings threshold^.
Plus, with a longer life expectancy, women often need even more super to go the distance!
What can you do?
We believe the onus shouldn’t be on women to fix the problem – instead, we need Government action to make the system fairer for women. However, there are some steps you or your loved ones can take to help minimise the gap if affected:
Make extra super contributions if you can
If you’ve missed the boat for making early contributions, don’t give up hope. Every dollar counts in super so adding a bit extra when you can will still make a difference.
To contribute a regular amount, you may like to consider setting up salary sacrifice directly from your pre-tax wage. This is a hassle free way that could see you save on tax whilst regularly boosting your retirement savings.
Alternatively, you can use our BPAY tool to make after-tax contributions (in some cases you can claim a tax deduction for these). This can be an easy way to top up your super when you have the money without the financial commitment of a regular contribution.
Make the most of “catch up” contributions
Limits apply as to how much you can put into superannuation. The concessional contribution cap is currently $25,000 per annum.
However new rules allow “catch up” contributions if you didn’t use the full cap amount for the 2018-19 financial year, provided your total super balance is less than $500,000 as at the previous 30 June. This may allow you to make extra pre-tax contributions that would have otherwise exceeded the cap.
Unfortunately, you won’t be able to access the unused portions of your cap from before 1 July 2018.
Discover spouse contributions
If you’re in a relationship you may like to discuss spouse contributions with your partner. Depending on your incomes, there can be tax incentives for both of you.
Don’t feel guilty, take action
Instead of worrying about your super balance (or lack thereof) get in touch with us for a super health check so we can check if you’re set up for success. We can review your insurance and investments within TelstraSuper over the phone at no additional cost, it’s part of your TelstraSuper membership. Getting these things sorted at any time can help make a difference when you retire. Call 1300 033 166.
Any general advice has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice on this website, 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 which is available on the Website or by calling 1300 033 166 between 8.30 am and 5.30 pm (AEST) Monday to Friday.
*https://www.ricewarner.com/balance-super-for-better/?utm_source=Email+Campaign&utm_medium=email&utm_campaign=42575-55423-Insight_Balance+Super+for+Better_14.3.19
^ ASFA research 2017 https://www.superannuation.asn.au/media/media-releases/2017/media-release-30-july-2017