Retirement, Superannuation

Ongoing contributions best for closing super gender gap

Continuing superannuation contributions during gaps in employment would do more to close the difference in retirement balances for women than encouraging higher levels of savings later in life, according to research released by Monash Business School.

The research also found the gender pay gap began in the early stages of their careers for some women and had a flow-on effect into their late careers and into their superannuation and retirement savings.

Monash Business School department of accounting senior lecturer Dr Carly Moulang said the research was based on Mercer Australia data that tracked superannuation accumulation trends from 2002-2012.

The data tracked women in three age cohorts – early career (24-26), mid-career (34-36) and late career (44-46) – including the cumulative effect on the individual retirement savings of specific people tracked during that period.

“In 2002, comparing the retirement balance of men and women, the youngest cohort had an average gender gap of $1142 in 2002, while the oldest group had $21,889,” Moulang said, adding the gap had widened to $18,608 and $81,769 respectively by 2011/12.

She pointed out the more frequent gaps in the younger cohorts arose because they were more likely to be establishing a family at that time, but also because of unequal pay and salary.

“At 24-26, generally around the time of one’s first professional job, graduate employment rates are high for women but their salaries are lower. This has a significant long-term impact on women’s superannuation balances from which they cannot recover,” she said.

“Gender-based differences in labour force participation, the presence of dependent children and other caring responsibilities impact on women’s ability to access waged work more than men. Women are also more likely to be employed part-time and work fewer hours.”

A possible solution to closing the gap was to continue paying women’s superannuation contributions during employment gaps instead of pushing for further savings, she said.

“Much of the recent response to gender inequalities in pension savings has been to encourage women to save more. This is an inadequate response that will not bridge the gap revealed here,” she said.

“The continuation of contribution payments during this time would mean they experience less gaps in their accumulation. This would help women, at least to some extent, become more on par with men as they access their retirement funds.”

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