How The Gender Pay Gap Affects Your Superannuation – And What You Can Do About It
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.
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. (pls hyperlink to compound interest article)
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.
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.
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.
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