How The Gender Pay Gap Affects Your Superannuation – And What You Can Do About It

This International Women’s Day, the theme is “Embrace Equity.” It’s a call to action for individuals and organizations to promote equality, inclusivity, and fairness for all genders.

The impact of the gender pay gap goes beyond pay rates in the workforce. It also has far-reaching consequences for women right into their retirement. We talk about how preparation and planning for life events can close the gap and give you options for your future.

By embracing equity, we can strive towards a future where women have the same access to opportunities, resources, and support as men. This includes closing the gender pay gap, which has far-reaching consequences for women’s financial security, especially in retirement.

How The Gender Pay Gap Affects Your Super

The gender pay gap issue that has become a talking point and a significant concern for women and families across Australia actually goes beyond pay rates in the workforce. It also has far-reaching consequences for women right into their retirement.

Workplace Gender Equality Agency’s most recent annual scorecard showed that women earn on average 12 per cent less than their male counterparts. The pay gaps favouring men were found in every category and women continue to be under-represented in leadership and upper management roles. In addition, a survey conducted by RMIT showed that 80% of women also provided the day-to-day needs for their family. Based on this, it’s not a surprise that 62% of women take on part-time roles while they have young children at home.

The major flow-on effect from years of pay disparity and the ongoing balance of work and home priorities, means that women are starting retirement with considerably lower superannuation balances than men. And this is why it’s more important than ever to prepare in advance and plan for income changes during various stages of your life.

Why Is There A Gender Retirement Gap?

ASFA reports that women fall behind considerably when it comes to super balances at all ages and stages of life. And disparities begin to emerge quite early. (30 to 34 year age bracket).

What contributes to the gap?

Lower paid roles – The crux of the issue. On average, women are paid less than men.

Part-time or casual jobs – After time away from work, women often return to part-time or casual jobs to continue managing their home priorities.

Primary carer for family – Women are not only carers for dependent children, but also care for elderly parents or relatives. At times, extending the period of part-time employment.

Career breaks – Women who take extended breaks from the workforce have considerably less time to accumulate enough money to see them through retirement.

This list shows why there’s such a marked difference between the super balances of men and women at retirement age.

Preparation And Planning Can Help Reduce The Gap

One of the benefits of planning early for your retirement is that it gives you an opportunity to build a nest egg to support your lifestyle potential. By viewing your retirement in this way, it makes it easier to plan for the life you want.

Financial Planning is about more than just building assets. It’s about leaving no stone unturned to find what more is possible for you. Generating enough income to support your lifestyle potential.

If you’re planning a family, include superannuation when you’re considering the financial decisions you’ll need to make. Not only when you welcome your new addition, but when you consider your options for returning to work as well.

An experienced planner can identify strategies to reduce the superannuation gap and improve your options later in life. But don’t leave it too late. After all, the sooner you start, the more time you have to take advantage of compound interest.

Is There Anything Being Done About Gender Pay Gap And Its Effects On Super?

There are some Australian companies who are playing their part in closing the gender retirement gap by paying super contributions on unpaid parental leave. Some have been doing this as far back as 2010.

There’s also increasing industry pressure on the government to add the superannuation guarantee to its paid parental leave scheme however there has been no indication they will consider it at this stage.

It’s Not Too Late. What Can You Do To Build Your Super Now?

With proactive steps and making the most of current legislation, you can start moving your superannuation in the right direction.

Contribute extra

The concessional contributions cap is now $25,000 for individuals. This cap includes your employer and salary sacrifice contributions. You may be able to claim a tax deduction on any additional contributions.

Check your eligibility for any government schemes

The government offers two forms of superannuation support for low-income earners.

The low-income super tax offset (LISTO) makes a payment to your super equal to 15% of your concessional contributions to compensate you for the tax paid on those contributions.

The co-contribution scheme offers eligible income earners a sliding scale of super contributions from the government in line with personal non-concessional contributions you make.

Spouse Co-Contributions

Your spouse may receive a tax offset for contributing to your super if your income is lower than $37,000.

Treat yourself to peace of mind, start closing the gender pay gap. Find out where to start, book an appointment with one of our Executive Planners.

IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (No. 233209), located at Level 3, 50-56 Sanders St, Upper Mt Gravatt Q 4122. The information and opinions contained in this fact sheet are general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.