Superannuation Policy Analysis by NFAW

on Monday, 15 July 2013. Posted in 2013 Election Policies Analysis

The NFAW has compared and contrasted policies of the major political parties bearing on superannuation for women in the lead up to the 2013 election. 

The superannuation system is a gender blind system.  There are no provisions that have a directly gendered outcome, but there is an inherent bias in the way in which the superannuation system interacts with women’s lives that gives significantly worse outcomes for women than for men.  Superannuation trustees are predominantly male (79.5% in 2013) thus superannuation funds may not take into account the different needs of female members.

The superannuation system overall is not a fair system.  The heart of superannuation policy is the link to what people earn, with a proportion of current earnings set aside for retirement.  The Henry Review made a number of recommendations to reduce this inequality.  In April 2012 Treasury estimated that 23.4% of superannuation tax concessions would go to the top 5% of earners (Treasury, 2012)[1].

Women are disadvantaged under this system for two main reasons:  lower workforce participation rates, particularly during childbearing years, and lower pay, which result from higher levels of part time work, lower rates of pay and occupational choices.  Women also live longer, and even contributing 15% a women working full time at average female earnings for 40 years is likely to outlive her superannuation.

Women are participating more in the labour market, but they have more difficulty finding work, earn less and are more likely to work part time than men (OECD,2012). A key factor limiting women’s savings is their responsibility for the majority of ‘unpaid work’, such as raising and caring for children (Heathrose Research, 2012).  The gender pay gap is not only a factor of reduced hours of work, but also gender segregation in the labour markets where women are over-represented in lower paid jobs such as health and welfare (OECD, 2012).  As work-based retirement savings schemes are usually based on a proportion of earnings, women with lower earnings consequently have lower aggregate savings on retirement.

This analysis is based on two categories of proposals:  those that affect low income earners, and those to assist unpaid carers, as these proposals will have a disproportionate impact on women.  We note, however, that some of these proposals have the potential to reduce the take-home pay of low income earners, and urge that take-home pay is protected in the introduction of these changes.

This paper has been authored by Dr Helen Hodgson and Ruth Medd, and published by the National Foundation for Australian Women.

Superannuation June 2013

[1] Note that this disregarded the proposed increased contributions tax payable by people earning more than $300,000 pa.