Sandra is 76, doesn’t own a property, is a transient house-sitter, has a couple of hundred thousand dollars in a fixed-term deposit and nothing in superannuation. Sarah* is in her mid-forties, rents the house she lives in with her three daughters and has $40,000 in superannuation. Liz is 54, owns her own free-standing three-bedroom home in Canberra, and her super balance is close to $1.7m.
Ages, accommodation and dollar figures – basic information, you might think, revealing little about these women. But show me a woman’s superannuation and I’ll tell you about her life. Women’s super numbers tell stories: about the curveballs, the challenges and the catastrophes; about lives spent caring for children, or elderly or disabled family members, or lives upended by abusive relationships and coercive control; about creative, transient lives or lives in which work has been constant and well-paid but, sometimes lamentably, children have not been a feature.
“It’s almost like telling a tree’s age by looking at the rings and you can see when they’ve been through drought and fire,” says Jo Kowalczyk, the CEO of Women in Super, the peak body for women in the superannuation and financial services industries. “It tracks the story of their life.”
The numbers also reflect a broader story about superannuation in Australia, too – that it’s failing women. On average, women aged 60 to 64 have about a quarter less in their super than men of the same age and a large number of women, especially older women, say they have no superannuation. Little surprise then that single women over 55, particularly those who are single, divorced or widowed, are the fastest-growing group at risk of homelessness.
Sandra, for example, has a small nest egg but no super and barely survives on the other arm of the retirement income system, the age pension. When she first emailed me, she described herself as “homeless”. “I’ve been housesitting for eight years to alleviate the homelessness.”
When Sandra hasn’t been able to get a house-sit, or that time she broke her arm, she has stayed with supportive friends and family. She thinks about other options. “A motor home is looking good and I’ve also got a tent on the top of my car; I don’t mind camping, I’m not averse to roughing it,” she says. “But I won’t sleep in the car. That’s one thing I won’t be doing.”
The reasons the super system is failing women are well-aired: the compulsory employer contribution scheme introduced by the Keating government in 1992 carried fundamental inequities from the outset.
“It’s predicated on the idea that you’re going to work 40 hours a week from when you finish school, or university or whatever, until you retire,” says Jo Kowalczyk. There is no allowance for career breaks for raising children or taking on other caring roles; there is no glance cast towards the unpaid work that we depend on for our communities to function. (According to a report released by Carers Australia in May, the superannuation balance at age 67 of a primary carer is reduced by about $17,700 for every year they are in that caring role. Figures from 2018 show that more than 70% of carers are women.) Nor does the system take into account the fact that women are more likely to work part-time, particularly after having children, or to be in episodic casual work.
But the gender gap between women and men’s superannuation reflects an accumulation of economic disadvantage women face over a lifetime and is inextricably connected with the gender gap in working-life earnings – the gap between the average weekly ordinary-time earnings of women compared to men, which is about 14%.
The gender pay gap picks up the facts that women are disproportionately in lower-paid feminised industries – such as aged care and early-childhood learning – and, at the top of the tree in white-collar or elite professions, women get paid substantially less than men performing the same roles.
Additionally, when women return to work after having children, they’re subject to the widely acknowledged “motherhood tax”. “If they’re able to get into full-time work, they’re often a good number of steps behind in terms of their career progression,” says Siobhan Austen, emeritus professor of economics at Curtin University. Melissa Birks, general manager, advocacy, at the Australian Institute of Superannuation, adds that persistent biases also mean they’re less likely to be promoted.
The systemic inequalities women face are complex, knotty. “It’s a wicked problem which probably answers the question why nobody’s addressed it,” says Birks. “There isn’t one simple solution, there are multiple things that need to be done. And it takes political courage to do those things and it takes recognition of the value of unpaid work in our community.”
Before the election, Labor shelved its plan to pay superannuation on paid parental leave but Stephen Jones, the assistant treasurer and minister for financial services, says it is something the government wants to do when there is “headroom” in the budget. “It’s frankly a small part of the equity-in-super equation but it’s symbolically important, and we get that.”
The relationship tax
Sarah, a Perth professional, was in and out of the workforce through her early 30s, taking a year or more off after each of her children was born. Her husband was controlling and emotionally abusive. For a while she worked in his business, which wasn’t doing well. “I didn’t always pay myself.”
After Sarah’s first child was born, her husband persuaded her to set up life insurance. “I had a newborn baby; I wasn’t really thinking straight.” She believes she was suffering postnatal depression. A financial adviser told her she could withdraw money from her superannuation to pay into the life insurance. She thinks that over the next few years tens of thousands dollars of her limited superannuation was paid into the now-cancelled life insurance policy.
Eventually, Sarah found the courage to leave her husband. By then she was in a mess and wanted the hell to be behind her. “I was too scared to ask for any of his super when I left the marriage. So I got nothing.” Now she is in her mid-forties, renting, and with her children still in school. She has $40,000 in her superannuation fund.
Much less discussed than time out of work and the gender pay gap’s effect on women’s retirement savings is the compounding blow that divorce and separation can strike. A 2018 Monash University report commissioned by AustralianSuper, “The future face of poverty is female”, noted that divorce particularly harmed the retirement savings of women, who frequently made career sacrifices during their marriage on the presumption they would have a pooled retirement income.
Sometimes a financial settlement goes reasonably smoothly, as in the case of Lucy, a Melbourne academic skills adviser who, after their marriage broke down in 2015, was able to reach a settlement with her ex-husband through mediation. “He was violent and a drinker and we’ve had our moments, but for the kids’ sake, it’s worked out OK.”
Lucy and her ex, who have two nearly-adult daughters, sold the family home and made enough money on it that they were able to buy two smaller homes. They pooled their super and split it down the middle. Lucy is 56 and has about $280,000 in her superannuation account.
But many other women, like Sarah, feel uncomfortable about asking for a super split; the psychology of superannuation is such that many people view it as a personal thing, even if the law considers it part of the pool of assets in a property settlement. The future face of poverty is female report said women often viewed superannuation splitting as complicated and expensive and preferred “to forego their rights rather than engage with another group of professionals”. The lost retirement income becomes collateral damage.
In Sandra’s case, at the time of her divorce in the early 1990s, no one told her that she was entitled to some of her solicitor ex-husband’s superannuation. “I obviously had a shit lawyer,” she says.
Issues of coercive control come into play in women’s superannuation disadvantage in multiple ways. The Australian Institute of Superannuation Trustees estimates that more than 70,000 women who withdrew superannuation during the government’s Covid-19 early release of super program were coerced into doing so.
Meanwhile, Austen is working on a project looking at retired couples in “male-breadwinner households” in which the woman worked in the home and raised children. In many cases, due to the man’s superannuation balance, she is not entitled to the age pension. “In retirement, you’ve got a lot of women who are financially dependent on their partner’s super. And so you’ve got big power imbalances in households.”
In 2021, the federal government legislated to improve the visibility of superannuation assets in family law proceedings, a measure that is expected to help women going through difficult property settlements. Since April this year, parties to family law proceedings have been able to request up-to-date information from the Australian Tax Office about a former partner’s super. Nevertheless, a woman in her senior years in a long-term relationship does not have the right to any information about her partner’s superannuation situation, even if she has no savings or income of her own.
But in the story of women’s superannuation, even a triumphant financial outcome unencumbered by relationship complications and losses can include a chapter of regret. Liz is a Canberra public servant. Her superannuation balance of about $1.7m reflects a lifetime of careful saving: she has made concessional contributions up to the annual limit and transferred external savings and investments into super as non-concessional contributions. “I feel sad that I never got to have children,” Liz says. “But yeah, there are financial benefits to being in the workforce the whole time and not having to support dependents.”
How do we fix it?
It is clear that a suite of solutions is required to address the failure of the superannuation system to provide secure and sustainable retirement income for women.
Austen believes that a “major recalibration” of superannuation taxation settings is needed. She points to the large tax concessions on superannuation that flow to high earners and men more than women. “It’s become a vehicle for immense taxpayer-subsidised wealth creation. Those policy settings result in a significant gender inequality.”
Jones believes wages will be the biggest driver in addressing the issue. “Getting pay equality is what’s going to close the gap around retirement income inequality.”
Others disagree. “Fixing the pay gap doesn’t fix the super gap, because you still take time out of the workforce,” says Birks. “And then when you come back part-time, which is what so many women do, you’re on two thirds of the income that you were on before.” She argues that free childcare would impact super balances as it would enable more women to return to more hours of work after having children.
Austen adds: “Even if you got rid of the gender pay gap, you would still have a gap in superannuation.” She believes other things are more important, including implementing measures that give women who end up being financially dependent on their partners in retirement some level of say about the use of the superannuation money they’re dependent on, and protecting the capacity of the age pension to deliver a decent standard of living.
“When we shifted our retirement income system towards superannuation with the deliberate intent of reducing the role of the age pension, we shifted from a more gender equal to a more gender unequal retirement income system.”
Joey Moloney, senior associate in the Grattan Institute’s economic policy program, believes the pension is more important than superannuation in addressing inequality and is largely effective by distributing income based on need. Within the framework of the pension, though, Moloney identifies the cost of housing as a major issue. “The clearest, most direct lever you could pull … is an increase in rent assistance, and that will disproportionately benefit women, because there are more women single private renters in retirement than men.”
Other measures will add incremental benefits: from July 1, employers will be required to pay superannuation contributions to workers who earn less than $450 a month from one employer. According to the Association of Superannuation Funds of Australia, the measure will benefit about 300,000 people, 63% of whom are women.
Superannuation on paid parental leave is another part of the broader equation but the federal government’s 2020 “Retirement income review” report found that it would only have a small impact on narrowing the retirement income gap.
Some experts believe we should explore carer credits or other similar mechanisms through which the government recognises unpaid work. “There are international examples where women take time out of the workforce for caring … [and] get recognition for that by a payment into their pension or, you know, the superannuation equivalent,” says Kowalczyk. “Let’s get the costing done on this.”
Jones says the government’s first priorities in terms of addressing retirement income inequality are ensuring the passage of the superannuation guarantee levy from 10% to 10.5% in July and requiring the tax office to meet targets for recovering unpaid superannuation. “We’ve got about a $6bn problem in unpaid super in this country, largely women and low-paid workers.”
Many of the women I speak to have come to their own conclusions about how to solve the problem. Lucy, the Melbourne academic skills adviser, thinks she’ll remain single. “I certainly wouldn’t get tied up in all that asset stuff with a guy – bloody scary.” Another woman tells me: “I have to look after myself.”
Sarah, the Perth mother, lives a modest life. Her kids don’t go without but, for now, luxuries for herself – clothes or nice beauty products – are out of the question. But she says she feels so much more financially stable now she’s in control of her own money. “I would not become financially reliant on somebody again.”
* Some of the names in this story have been changed
