According to Industry Super Australia (ISA) currently 39% of single Australian women are retiring in poverty and declining rates of home ownership will only push this figure higher. Clearly, changes to superannuation, especially tax concessions on super, are needed.
Last month ISA told the Senate Inquiry into Economic Security for Women in Retirement that Australian women will continue to experience deep economic insecurity in retirement for decades to come unless the government makes changes to superannuation and pension settings.
“Our daughters start their working life as well-educated as our sons, but the retirement system is weighted against them. Current settings do not deliver retirement security for most women and provide twice the level of government support to men as women in the form of tax concessions,” said Robbie Campo, Deputy Director of Industry Super Australia.
“These settings magnify rather than moderate gender differences in lifetime earnings. For example, the persistent gender pay gap, currently at 18%, blows out to a far worse gap in super savings of 44%. We can’t afford a system that fails half the population so badly,” she said.
According to ISA $30 billion a year in super tax concessions flow disproportionately to men who receive 67% of super tax breaks. With a third of women not in a relationship by retirement age, 70% of single retired women have to rely on the full age pension just to get by.
“Years of unpaid, lower paid and part-time work mean women miss out on tax concessions and the magic ingredient of superannuation – the steady compounding of contributions and returns. Rather than accumulating wealth, women are accumulating poverty, retiring with just over half the super of men, on average, if they’re lucky,” said Ms Campo.
“One of the key impediments to women achieving better security in retirement is the structure of super tax concessions. At the moment, the more you earn, the bigger the hand out. For instance, single men in the top 1% of income earners gain the most from the system, benefiting from an estimated $2.8 million in tax concessions over their working lifetime. This supercharges their retirement income, even though they don’t need financial help to reach a comfortable standard. It makes no sense.”
Government reforms are needed to improve the outlook for millions of Australian women and modernise a system skewed to male working patterns and the notion of men as the breadwinner and provider.
Ms Campo says if we don’t move now we will condemn future generations of women to a substandard existence in the latter part of their lives. “In a country as rich as Australia, this would be a disgrace. Our daughters and their daughters deserve better.”
ISA’s full submission to the Senate Inquiry into Economic Security for Women In Retirement can be found here