Women’s retirement savings not so super as government urged to act

An estimated $2.8 billion in super savings will be forgone by those, mostly women, taking time out of the workforce to care for their children because super has not been paid on the Commonwealth Parental Leave Pay since its inception in 2011.

The estimate is for women at retirement, as they lose the compounding effect of not having super paid on government parental leave.

Debby Blakey, the chief executive of super fund HESTA, who commissioned research into the scheme’s shortfall, says adding super to Commonwealth Parental Leave Pay is one of the single biggest things that the federal government could do to help ensure better retirements for women.

Shani Jayamanne says financial independence for her means being able to support herself, regardless of unforeseen future circumstances.Credit:Wolter Peeters

Blakey says that super not being paid is an inequity that is contributing to the gender super gap and is unfair for new parents, especially women who were far more likely to take parental leave than men.

International Women’s Day is a chance to take a look at how much progress has been made and how much there remains to do to improve the financial situation of women.

One such improvement to help set up better financial futures for women is the need to increase financial literacy, starting at an early age. Studies show women score less on financial literacy tests than men.

Shani Jayamanne, a 30-year-old investment specialist at Morningstar, says her experience growing up was similar to many immigrants, instilling the importance of pursuing education.

Jayamanne came with her parents to Australia from Sri Lanka, aged three. And even though she studied commerce at university, she feels she did not really improve her financial literacy until after she graduated and worked in roles that required it.

“Financial independence is important to me as it gives me peace of mind [that I am able to support myself] regardless of any unforeseen future circumstances,” she says.

Improving financial literacy is a longer-term goal, but HESTA and others are pushing for paid super on Commonwealth Parental Leave Pay to immediately increase the super balances of those who take the leave.

APRA figures show 290,000 female accounts with $500,000 or more compared to 510,000 accounts for males.Credit:AFR

Annika Bradley, director of manager research ratings, Asia Pacific, at Morningstar, cites figures from the Australian Prudential Regulation Authority (APRA) showing males 55 to 59 have $44,400 more in super than women of the same age.

“Women also aren’t featuring as prominently as we’d like at the higher end of the account balance spectrum,” Bradley says. APRA figures show 290,000 female accounts with $500,000 or more compared to 510,000 accounts for males.

Bradley says while there are many reasons for the super gender gap, a de-stigmatisation of men taking time out from paid work to care for children would help women return to work sooner and increase their super.

Dawn Stuart, 43, a HESTA member, took a total of four years out of the paid workforce to care for her three children, who are nine and under.

Her husband’s superannuation balance is about three times larger than hers. She received Commonwealth Parental Leave Pay for some of her time out of the workforce and said that receiving super with it would have boosted her retirement savings.

“It’s backwards in this day and age, not to have the super guarantee paid on the government scheme,” Stuart says.

Part of the answer for levelling up the gender divide is not only government policies directed towards helping women, such as paying super on Commonwealth Parental Leave Pay, but also seeing more women occupying senior roles and roles in higher-paying professions, along with receiving better pay for the professions they already dominate.

Bianca Hartge-Hazelman, the chief executive of Financy, a website dedicated to women’s finances, says there needs to be more investment in schools and university-led programs that educate students on the financial implications of gender stereotypes.

That would help better ensure that women have more choices than stereotypes often suggest, which contributes to the under-representation of women in some professions, she says.

Professor Yolande Strengers, a digital sociologist and human-computer interaction specialist at Monash University, says “geek stereotypes”, which are reinforced through all facets of society, are a factor in the under-representation of women in the computing disciplines.

The UN Women Australia’s International Women’s Day theme is “Cracking the Code: Innovation for a gender-equal future”.

The theme builds on the idea that by embracing new technologies and advancing women’s skills and knowledge in STEM – science, technology, engineering, and mathematics – will enhance progress towards gender equality.

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