With so many Australians accessing their superannuation accounts early in response to the current economic downturn, there is more attention than ever at how the retirement scheme fails to provide adequate retirement savings for women. A new report - The Herstory of Super by Emma Dawson (@DawsonEJ) and Simone Casey (@SimoneCasey) of Per Capita (@PerCapita) for Women in Super (@WomeninSuper) – provides the historic context needed to understand why the system is failing women, and provides recommendations for sustainably supporting women into their old age.

Generational differences in superannuation savings

Australia’s superannuation system contains discriminatory traps that mean women will continue to retire with less super than their male peers. One trap that makes women’s super more vulnerable to economic shocks is due to their disproportionate responsibility for childcare.

To illustrate the incremental improvements in women’s retirement incomes resulting from the gradual extension of superannuation to women over the last half century, we tracked the transition from the experiences of the ‘silent generation’, who retired without significant independent superannuation funds, to the ‘baby boomer’ generation, who have begun to experience the benefits of superannuation incomes in retirement. This comparison clearly shows the positive impact on women’s financial security of the superannuation revolution.

Despite these advances, an overview of the various employer-designed superannuation schemes that existed prior to the introduction of universal superannuation reveals a history of direct and indirect discrimination against women in the provision of retirement saving systems. The slow rate of growth in coverage of Australian women by private superannuation schemes reveals the historical reliance of women on their partner’s income and retirement savings, and their resulting financial insecurity throughout the twentieth century.

It is not until the ‘Gen X’ and ‘Millennial’ generations that women have been in receipt of compulsory superannuation throughout their working lives and have therefore been able to save for their retirement.

Even so, our analysis shows that the design of universal superannuation - primarily its flat tax structure, its indifference to the nature of women’s labour force participation, and a number of policy interventions in the years since its introduction that have deliberately favoured higher-income men - means that these younger generations of Australian women are also likely to retire with significantly less superannuation than are their male peers, and many will not accrue sufficient savings for a secure retirement.

Depicting the generational gap in superannuation for women: The percentage of the female population with superannuation upon retirement by generation. Per Capita analysis of ABS data.

The impact of the COVID economic shock

The economic shock caused by the COVID-19 pandemic is having a disproportionate impact on women. What some are calling the ‘pink collar recession’ is playing out quite differently to previous economic downturns, which evolved gradually and tended to affect the blue-collar male workforce more than any other demographic. This time entire sections of our economy were shut down suddenly, and jobs in service industries and customer-facing roles, usually less vulnerable to economic downturns, were the first to get the chop as social distancing measures were enforced. Female employees are over-represented in service roles, in industries such as Accommodation and Food Services, and Retail Trade.

The gender gap in superannuation has been driving older women into poverty; early withdrawal creates an unprecedented retirement poverty cliff for women. Photo by Markus Spiske on Unsplash

Due to an increased need for at-home child care due to the temporary closure of schools and limitations on access to early childhood care and education, a significant number of women have stopped trying to find work altogether, or voluntarily reduced their working hours, as a result of COVID-19 and its impact on home life.

ABS Labour Force data shows that, following the biggest decline in labour force participation since the early 2000s in March and April 2020, women were 50% more likely than men to have stopped looking for work. Further, the ABS found that while men had reduced their hours of work by 7.5% in response to the pandemic, women have done so by 11.5%. These statistics almost certainly reflect the fact that women are taking on a disproportionate amount of additional unpaid work at home as families adjust to living in isolation.

But by far the biggest impact on retirement incomes from the pandemic is due to a deliberate government policy decision that fundamentally undermines the purpose of superannuation as a retirement savings scheme. The Morrison Government’s ‘Superannuation Early Access Scheme’ has already seen more than half a million Australians, the majority of whom are under 35, entirely wipe out their superannuation savings.

A way forward for a more equitable future

Our findings reinforce the need to support the proposed five-point plan from the Women in Super Make Super Fair campaign, and to implement measures to support women and low income earners to achieve better retirement incomes.

1. Additional annual $1,000 government contribution into super for low income earners, to better support those with inadequate retirement savings

2. No further delay to scheduled SG increases

3. Pay SG on the government paid parental scheme

4. Remove the $450 monthly income threshold on SG contributions

5. Require government to undertake and publish a gender impact statement for any changes to age pension or retirement income policy; ongoing tracking by WGEA of women's retirement gap

Modelling of a proposal, included in the Make Super Fair campaign, for government payments early in life to low income earners with low superannuation balances demonstrated it would significantly improve outcomes for women.

Finally, we call on the government to review superannuation tax concessions with the objective of ensuring they are fairer, more targeted and sustainable, and not used as a method of encouraging wealth accumulation. In light of the significant impact of COVID-19 on women’s jobs and financial security, there should also be an examination of the need for additional targeted measures to help women to recover their withdrawn superannuation savings.

You can download the full report here.

This post is part of the Women's Policy Action Tank initiative to analyse government policy using a gendered lens. View our other policy analysis pieces here.

Posted by @SusanMaury

The ‘Herstory’ of superannuation: Uncovering the discriminatory traps that disadvantage women