Mums say that Australia’s super system is “beyond our understanding, out of our control and not really set up for us”. Lets change this.
In March 2013, I blogged about the superannuation gender gap and I shared this powerful infographic. Since then, the issue of superannuation has hardly been out of the headlines.
In early April, after a frenzy of media speculation, Treasurer Wayne Swan announced a set of superannuation reforms that most of us aren’t in a position to benefit from and which leave “an incredible inequity” within our superannuation system untouched, according to The Australia Institute (TAI). The inequity is $32 billion in superannuation tax concessions “that delivers more to the top 10 per cent than it does to the bottom 60 per cent [of working Australians]”.
We should care about this issue because this $32 billion could have been better spent on compensating mothers for the $34,000* that’s lost to each of us when we take leave from the paid workforce to enter the ‘unpaid workforce of mums’ for a year. This $32 billion could have also gone to the NDIS, Gonski and many other important needs. Economist and TAI head, Richard Denniss, debated the value of the reforms with superannuation fund lobbyist John Brogden (CEO of the Financial Services Council), at a National Press Club lunch last month. He explained the inequalities in our current system and went in to bat for mothers:
“At the moment we have a situation in which the tax concessions for superannuation are being given not to those that need them the most, but to those who already have the most. The cost to the budget of providing tax concessions for superannuation this year will be around $32 billion. By 2015, Treasury estimates that this will rise to $45 billion per year…. Let me put $45 billion into context… It is more than we spend of health, education and defense. It will soon be the largest single cost in the commonwealth budget…”
“Image that you had $45 billion to invest in a retirement income system in Australia. Who would you give it to? Would you give most of that $45 billion to the people who need it the most or would you give most of that $45 billion to the people who have the most? If you were going to spend $45 billion to prop up retirement incomes, would you give none of it to women who are home caring for children? Would you give none of it to women at home caring for elderly parents? … Would you give none of it to people who can’t work due to disability or illness? Because right now, all of that $45 billion goes to people already in paid work and none of that goes to the 35% of Australians who are not in paid work…”
Then this week, finance expert Mark Bouris caused a stir when he published two Women’s Agenda articles on the way in which our superannuation system disadvantages women, mothers in particular. These excerpts describe the situation perfectly:
“Superannuation is predicated on time spent in employment, and the gross income of each member. So while the current median super balance of men aged 35 to 44 is around $41,000, for women of the same age it’s $22,600. For those about to retire – 55 to 64 year olds – men have a median $91,000 compared to women with $55,000.
The problem isn’t so much gender bias as structural inadequacy. Women have different lives to men. They typically take time out to have kids, they work part-time when they re-enter the workforce, and in order to have flexibility with their family responsibilities, they often work on contract from home or they do informal work for cash. All of these choices take contributions out of their super.”
Mark then reflects on some poignant conversations that he had with mums when researching and writing his articles:
“Perhaps the most chilling element [of these conversations] was the admission that superannuation was beyond their understanding, out of their control and not really set up for them.
They have a point. When you look at the superannuation industry, the funds focus on nine-to-five, full-time workers. They don’t really talk to casual, part time and self-employed workers – the cohorts in which women are strongly represented.
I am largely concerned that we are pushing women away from super, especially if the current system is forcing them to turn away, or turn off completely. What matters most is that half our population is disadvantaged by a supposedly universal system. That’s not something we can ignore.”
I am blogging about this issue again because it is so important and knowledge is power. I have shared some useful links below to help you think and plan. Essentially, there are some things that we must do now as individuals to ensure that we aren’t facing poverty later in life. There are also things we can change if we unite together. In Mark’s follow-up article, he suggested a number of policy changes that would improve women’s superannuation. But we won’t see any changes like these unless we unite together and ask for them with an incredibly loud voice. Join United Mothers.
Vision Super: Closing the Gender Gap
Radio National, Life Matters: Making Cents of Super
* Mums taking time out from work to care for children until they start school face losing $160,000 in superannuation. The superannuation sacrifice blows out to almost $290,000 when women stay at home for a decade from the age of 30, calculations by financial research firm Canstar reveal. One year out of the workforce costs $34,000, while three years out amounts to a $95,000 loss, it says. The estimates are based on women on an average starting salary of $50,000 from age 21, indexed to CPI each year. Source: http://www.heraldsun.com.au/news/victoria/stay-at-home-mothers-lose-up-to-290000-in-superannuation/story-e6frf7kx-1226591076219