Australian women are being urged to tip more of their savings into super to get a $500 top-up from the government so they aren’t poor at retirement.
Women continue to have much less saved up than men, with the Workplace Gender Equality Agency putting the super gender gap at 21.6 per cent by the time they are in their sixties.
Across all age groups, women last year had average superannuation balances of $131,500, a figure that was 30 per cent or $39,100 less than the equivalent retirement savings of $170,600 for men.
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Australian women are being urged to tip more of their savings into super to get a $500 top-up from the government so they aren’t poor at retirement. Women continue to have much less saved up than men, with the Workplace Gender Equality Agency putting the super gender gap at 21.6 per cent by the time they are in their sixties
Finance expert Effie Zahos, the editor-in-chief of Canstar, said women typically retired with less because they were more likely to be in lower-paid jobs, adding the compulsory super scheme that debuted in 1992 was biased in favour of men.
‘We have to recognise that the number of women that are earning under $40,000, and remember, this super system was built in 1991, and the work force has changed tremendously,’ she told Nine’s Today show.
‘So it doesn’t really work any more – it doesn’t work for women.’
The Australian Bureau of Statistics calculated the average Australian had $151,500 in superannuation – a level well below the $535,000 recommended for a mildly comfortable retirement.
Tax office data showed women aged 60 to 64 had even less, with average balances of $280,000 compared with $345,000 for men in the years just before retirement.
From July 1 this year, compulsory employer superannuation contributions are rising from 9.5 per cent to 10 per cent for adults who earn at least $450 a month – although this threshold may be changed in the May 11 budget.
They are rising to 12 per cent by July 2025 with incremental half a percentage point increases at the start of each financial year until then, under existing legislation.
Those changes could see the average 30 year old worker with $80,000 to $100,000 extra at retirement, compared to contributions remaining at 9.5 per cent.
Finance expert Effie Zahos, the editor-in-chief of Canstar, said women typically retired with less because they were more likely to be in lower-paid jobs
Ms Zahos said she believed even those changes were ‘probably not’ going to reduce the superannuation gap between men and women.
She blamed the existing threshold of $450 a month which disadvantages many women who do part-time and casual work as they balance being a mother.
That cut-off is expected to be dropped, meaning many low-income workers – the majority of whom are women – will receive super contributions from bosses for the first time.
Treasurer Josh Frydenberg has hinted the May 11 budget will be ‘female-friendly’.
But Superannuation Minister Jane Hume has hinted the government may delay increasing compulsory employer contributions from 9.5 per cent to 12 per cent in four years’ time.
Across all age groups, women last year had average superannuation balances of $131,500, a figure that was 30 per cent or $39,100 less than the equivalent retirement savings of $170,600 for men
‘We shouldn’t fool ourselves. A rise in the super guarantee will come at a trade-off, it will come as a trade-off to wages and particularly to wage growth,’ she told the ABC’s 7.30 program in March.
Regardless of the policy, Ms Zahos said women need to take action to boost their super balances by taking advantage of a government co-contribution of up to $500.
That is available before June 30 for people who earn under $39,836 – if they make an after-tax contribution of $1,000 to their super balance.
‘That only works if you’ve got a thousand dollars to put in, then yes you’ll get this perk,’ Ms Zahos said.
‘But a lot of women don’t or they’re out of the workforce.’
Another way for people on low incomes to boost their super is to nudge a higher-earning spouse for help, by showing them the incentives available if they make super contributions on your behalf.
So long as one partner earns under $40,000, the partner making a contribution on their spouse’s behalf can claim an tax offset of up to $540.
The maximum offset is earned from a spouse contribution of up to $3,000.
Meanwhile the Association of Superannuation Funds of Australia recommended a single Australian have $535,000 tucked away to live in a bit of style while couples needed $640,000 for an equivalent lifestyle.
Many Australians are a long way from achieving that savings goal with official data showing average super balances of just $286,800 in the final decade before retirement.