International Women’s Day – 8 March - is a time of celebration but it’s also cause to consider some sobering statistics about women and superannuation.
- By some accounts women have half as much money in their super accounts as men
- It’s known as the “superannuation gap”
- The average balance on retirement in 2012 for women was $105,000 but the average balance for men was $197,000.
- This is a difference of $92,000 – or several years of decent income.
- Based on modelling prepared by Industry Super Australia, this gap will increase to $170,000 by the year 2030.
It’s a real cause for concern – because the low-paid and female workers who need superannuation most - will not have enough.
How has this happened?
It is now commonly understood that women are well behind men when it comes to retirement income.
The Association of Superannuation Funds of Australia says that almost nine in 10 women have insufficient superannuation to support a comfortable retirement. Women’s typical work patterns, primary caring responsibilities and existing pay inequities pose many problems for retirement saving.
National statistics show that on average women’s earnings are still less than men. Pay inequity remains a problem as a result of women typically making up the majority of part time and casual workers and having less access to senior management roles, even in industries such as education, where the majority of teachers are women.
Women tend to spend less time in the workforce, due to factors such as raising children, returning to work on a part time basis and other caring responsibilities for elderly parents or grandchildren. Less working time means fewer years to accumulate superannuation.
Many women retire when their (often older) husbands retire, thereby forgoing a further few years of income.
Women live longer than men, with an average life expectancy of 87 years compared with 83 years for men, meaning that retirement income needs to be stretched over a longer period of time. This results in lower annual income levels.
The Human Rights Commission and Productivity Commission have noted the real dangers for women if the inequity in superannuation contributions and retirement incomes is not addressed.
Those are poverty, poor health, reduced life expectancy.1
Thankfully your union – that’s the childcare workers, cleaners, teacher aides, security workers, hospitality workers and the rest of you in United Voice – are part of one of the Australian trade union movement’s greatest achievements.
That’s the introduction of compulsory superannuation.
In lieu of wage increase during the Accord era in the 1980s, the Australian trade union movement converted a productivity-based wage increase into occupational superannuation.
This achievement has provided many Australians with an independent retirement income.
And the funds from superannuation funds have provided much needed investment capital into the Australian economy.
The superannuation contribution, to be paid by the employer, was to be made into industry superannuation funds stipulated by awards.
In the early 1990s, occupational superannuation was made universal amongst employees by the Superannuation Guarantee Act which covered those employees not covered by an award.
The introduction of occupational superannuation could only have been achieved by a federal Labor Government in Canberra.
Incredibly, the Liberal National coalition was initially opposed to the introduction of occupational superannuation based on the position adopted by their natural constituents – big business.
At every opportunity when in government the Liberal National Party has scrapped or delayed increases to the superannuation guarantee – that’s cost every worker in this country thousands of dollars in retirement savings.
Tony Abbott, back in 2014, delayed the increase in compulsory super contributions from 9.5 percent to 12 percent by 3 years from 2022 to 2025. That will cost workers $40 billion over seven years.
Some within the Liberal National Party ranks want to abolish that rise to 12 percent altogether which would cost the average worker $100,000 in retirement savings.
The Liberal Nationals have also abolished the low income superannuation contribution which provided for a tax refund for workers on low incomes. This will cost low income workers $30,000 in retirement savings.
So at least twice they have demonstrated no concern for the retirement income of ordinary Australians.
And after spending so long fighting the introduction of compulsory superannuation to benefit workers, now they want to get their hands on these retirement savings!
Ironically the billion-dollar funds that have been amassed through industry superannuation funds create their own problems. There are some from the conservative side of politics who want to get their hands on your superannuation.
Feeling the burn
It burns them up for two reasons.
Firstly, the success of industry superannuation funds attacks the logic of the Liberal Party’s central ideology.
Industry superannuation funds are set up to maximise the return for members - not to maximise profits.
According to the Liberal National ideology, everything that is profit is self-evidently superior.
Secondly, the not for profit industry super funds owned by workers consistently outperform the retail funds that are owned by banks and exist to generate profits.
Our greatest fear is that banks will offer employers kickbacks in the form of low interest loans or other incentive to have employees’ superannuation contributions made into underperforming retail funds owned by the banks.
Not content with attacking your retirement savings, some of the Liberal think tank want to purloin the family home as well.
The recent Liberal appointed Small Business Ombudsman, Kate Carnell, recently suggested the government should consider converting pension payments to elderly homeowners into a loan that is repaid when the property is sold.
So in other words your home is sold off from under you bit by bit to provide your own pension.
It will result in a poverty trap aimed at cutting pensions and denuding the deceased estates of pensioners.
Only a Liberal millionaire could come up with that idea.
The same plan for Medicare
They’ve got much the same plan for Medicare.
Opposition to universal health care has never been far from the surface within the ranks of the Liberal National Party and recently they have been reducing Medicare’s benefits by stealth.
We’ve been hearing a lot about a double dissolution recently – well the LNP’s plans for Medicare will mean a double disadvantage for those on low incomes moving into retirement.
Reducing or removing Medicare will adversely impact upon the retirement incomes of those most vulnerable.
As we get older, the need for medical services increases and as those services increase in price, it will the least wealthy who will suffer the most.
The double disadvantage facing those without sufficient retirement income is the prospect of not being able to afford health care in their retirement.
This will lead to those without means foregoing proper medical diagnostic services and treatment – is this the society we want for Australia?
I suspect it’s not what you want.
I will tell you what we want for Australians moving into retirement – we want a fair system so all workers can retire in security.
Addressing inequities in superannuation
We’ve been working hard on addressing the inequities in super, but particularly for women workers.
Recently the Senate undertook a committee inquiry on Economic Security for Women in Retirement. With advice from United Voice, the ACTU made the following recommendations to that committee:
- Increasing the superannuation guarantee rate to 12 per cent by 2019;
- Retaining the low income superannuation contribution until a progressive superannuation system has been implemented;
- Extending the Superannuation Guarantee entitlement to all employees regardless of age or earnings;
- Boosting women’s superannuation through a 2% increase in mandatory employer contributions;
- Implementing a Government-funded annual superannuation payment for low income employees early in their working lives;
- Ensuring that superannuation contributions to employees during period of parental leave, whilst on workers’ compensation and with respect to long term transfer payment recipients; and
- Increasing the single age pension rate.
By spelling out the current situation around superannuation, it shows we should all be concerned at what the LNP is planning.
Female workers need to stay informed about super and the changes that may be coming, you need to talk to your local federal MP about how women are falling behind in superannuation savings, and you need to tell them again until they promise to do something about it.
Often we hear the plea from older female workers that “they can’t afford to retire”. The truth is you simply can’t afford to stay silent on super.
by QCU General Secretary Ros McLennan, adapted from a speech to United Voice Women in Super conference, 6 March 2016.