Gender gap in super still an issue

There's a long history of discrimination against women in Australian superannuation. While the advent of compulsory super and improved unsupported contribution arrangements have helped reduce the gross disparity in account balances between men and women, this disparity remains.

The superannuation industry, including the Commonwealth's defined benefit funds, may prefer to forget past practices. There was a time when women were forced to leave their super fund on marriage and, as a result, were deprived of unvested benefits.

The winners then were long-term (usually permanent) employees, predominantly male, who reaped their full entitlements on retirement. It's indisputable that we have come a long way.

Today, employer contributions have to be vested in employees' accounts and women and others who leave the workforce temporarily, for example, for family reasons or via redundancies, don't lose their super entitlements. This is, nevertheless, cold comfort for the generation of women deprived of superannuation benefits by past shoddy practices and poor advice.

The gap between the median balances of 55-year-old men and women is from $100,000 to $38,000.

It wasn't too long ago that during a family breakdown, women who sacrificed a career to bring up a family were unable to access their partner's vested super benefits. Family law changes now allow women to access a fair share of their former partner's superannuation.

Despite the progress, more needs to be done to improve women's financial position on retirement. Measures allowing sharing of super benefits between spouses deserve more promotion.

Taxpayers are allowed to transfer up to 85 per cent of new concessional contributions to a spouse account, which helps boost the account balances of women whose partners are willing to assist them. Improving the flexibility of super sharing rules would help women with lower incomes and outside the workforce for substantial periods to boost their super.

However, there's a worrying possibility of impending changes to superannuation tax arrangements. To the extent these changes limit the scope for new contributions, it will be increasingly difficult for those with little super to catch up.

Whatever savings measures the government implements, priority needs to be given to assisting those with little super. Blanket reductions not tailored to address the special problems women face will inevitably worsen the position of those needing to boost their retirement assets.

One option would be to confine any restrictions on new contributions to those with large balances already. We can only hope that impending changes won't undo the progress made and will focus on changes that reduce the growing superannuation gender imbalance.

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Daryl Dixon

Executive Chairman

Daryl Dixon is one of Australia’s foremost investment experts and a well known writer and consultant. He has provided trusted advice to thousands of personal clients over more than 25 years and is an acknowledged expert in the areas of tax, superannuation (including public sector superannuation), social security and investments.

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