Why Women Are Retiring In Poverty

20 November 2015

On 17 August 2015, the Senate referred the economic security for women in retirement for inquiry. Submissions closed on 30 October 2015 and the Senate Economics Committee inquiry has heard evidence that many women are retiring in poverty, without adequate superannuation.

Analysis of ABS data shows that women are retiring with almost half the superannuation balances of men, and evidence provided to the committee found that this problem is likely to continue, with women currently entering the workforce likely to face similar problems in decades to come.

Committee Chair Senator Chris Ketter observed “these women have had a lifetime of hard work, both inside and outside of the home. Now in their 60s they are struggling to afford health costs, pay off their mortgages, and face the uncertainty of relying on the old aged pension once they retire.”



Weighted retirement system

Industry Super Australia

Industry Super Australia has told the inquiry 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 a priority, especially tax concessions on super.

“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.

The key points of ISA’s submission were:

  • $30 billion a year in super tax concessions flow disproportionately to men who receive 67% of super tax breaks and women just 33%;
  • 70% of single, retired women rely on the full age pension;
  • 39% of single, retired women live in poverty – declining rates of home ownership will push this higher;
  • Women cannot rely on a partner for financial security – a third of women are not in a relationship by retirement age, while 40% of couples have insufficient savings to retire comfortably;

“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.

Australian Institute of Superannuation Trustees (AIST)

The AIST, on the other hand, noted that changes to the super system will not be enough to close the retirement savings gap given that the major contributing factors are ‘pay inequity’ and constraints on female workforce participation.

While AIST says reforms – such as extending the Low Income Super Contribution (LISC) scheme and removing the $450 monthly contribution limit – are important for women, there are external issues to super that can have a much greater impact on either the gender gap or fairness of the super system.

“Improving women’s retirement outcomes is not just a matter of pulling levers inside the super system,” AIST CEO Tom Garcia said. “If we are going to close the gap, we need a holistic approach, which includes a full examination of relevant policies outside of super.”

AIST has called on the Government to convene a broad-based summit on the objectives of the retirement incomes system, followed by a technical review addressing structural issues.

The inquiry will report in March 2016.

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