Gender superannuation gap shrinking, but still omnipresent

Gender superannuation gap shrinking, but still omnipresent

The gender superannuation gap has shrunk by 4.3 percentage points over the last ten years, according to research by Roy Morgan.

In 2008, 57.4 per cent of women had superannuation, 9.1 percentage points less than men (66.5 per cent). Today, the gap has reduced to 64.7 per cent of women having superannuation compared to 69 per cent of men.

Further, the average balance for women has grown more rapidly than for men, increasing 87 per cent to $127,000 in the last ten years. This is compared to men who saw an increase of 53 percent to $176,000.

This is positive news, given that only three months ago Roy Morgan research showed that the gender superannuation gap had seen “no real progress”, only shrinking 2.1 percentage points in this same ten-year time frame.

Closing the gap

Average Female Superannuation as Proportion of Male Average by Age

istock_79305201_small5 Source: Roy Morgan

There has been improvement in the female proportion of male average superannuation across each age gap, as seen in the above graph.

The greatest increase has been made by 50-59 year olds, improving by 15.2 percentage points. This was followed by 35-49 year olds (up 14.2 percentage points) and the 60+ age group, growing by 9.8 percentage points.

According to Roy Morgan, women over 60 have the “lowest incidence of superannuation but they have higher balances than younger females due to contributing for longer”.

This shrinking superannuation gap has been attributed to compulsory superannuation having “another decade to impact the market”, paired with an increase of visibility and discourse around the gender superannuation gap in the public.

How the pay gap still plays a pivotal role 

Average Income of Workers with Superannuation – Males vs Females

istock_79305201_small5 Source: Roy Morgan

The above graph shows that women with superannuation who currently work have an average income of $60,000 compared to men with $80,400. Women therefore earn around 74.6 per cent of the male average.

Roy Morgan have attributed the lower income and superannuation balances of women to the fact that nearly half (46.2 per cent) of employed females work part-time, compared to only 20.4 per cent of males.

The gender pay gap makes a significant impact on the balance of women’s superannuation. This is not just the notion that women on average have lower incomes than males, but the long-term impact that women taking on a caretaker role (maternity leave, part time or casual work to take care of children and/or sick relatives etc.) makes on their income over their careers.

Norman Morris, Industry Communications Director at Roy Morgan, said “good progress has been made over the last decade regarding the average female superannuation balance and ownership levels and as a result they are closing the gap on males”.  

“The current gap shows that the average female represents 72.2 per cent of the male superannuation average and although it still has a long way to go, it is a significant improvement on the 59.1 per cent recorded in 2008. The gap in ownership of superannuation has also narrowed from 9.1 per cent to only 4.3 per cent. 

“Despite real gains in employment for women over the last decade, they still lag men in terms of full time employment and as a consequence a greater proportion of women are in part time work with its associated lower annual income. 

“This contributes to average incomes of only around 75 per cent of the male average, which in turn leads to lower superannuation contributions and balances compared to males. 

“In addition to problems associated with lower average incomes, females are more likely to have interrupted employment. 

“However despite these negative factors operating against them, women have made gains in closing the superannuation gap to men. 

“Generally both sexes are still unlikely to fund an adequate retirement entirely from superannuation unless contribution levels are increased and continue higher for several decades. 

“Currently, we have seen in the newly released ‘Roy Morgan Wealth Report’ that there is a need for a more holistic understanding of an individual’s net wealth that goes beyond superannuation and includes other investments, home ownership, debt levels, personal and household incomes, bank accounts, financial attitudes and other factors that have the potential to have a major impact on retirement funding”, said Mr Morris. 

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Learn more about superannuation

How does superannuation work?

Superannuation is paid by employers to employees, at least once every three months. The ‘superannuation guarantee’ is currently 9.5 per cent – which means that your employer must pay you superannuation equivalent to 9.5 per cent of your salary. The guarantee is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

Superannuation is generally taxed at 15 per cent. However, if you earn less than $37,000, you will be automatically reimbursed up to $500 of the tax you paid. Also, if your income plus concessional superannuation contributions exceed $250,000, you will also be charged Division 293 tax. This is an extra 15 per cent tax on your concessional contributions or the amount above $250,000 – whichever is lesser.

You can withdraw your superannuation when you meet the ‘conditions of release’. The conditions of release say you can claim your super when you reach:

  • Age 65
  • Your ‘preservation age’ and retire
  • Your preservation age and begin a ‘transition to retirement’ while still working

 

What is the superannuation rate?

The superannuation rate, or guarantee rate, is the percentage of your salary that your employer must pay into your superannuation fund. The superannuation guarantee has been set at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

How much is superannuation?

Superannuation is currently 9.5 per cent – which means that your employer must pay you superannuation equivalent to 9.5 per cent of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

How is superannuation calculated?

Superannuation is calculated at the rate of 9.5 per cent of your gross salary and wages. So if you had a salary of $50,000, your superannuation would be 9.5 per cent of that, or $4,750. This would be paid on top of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

How much is superannuation in Australia?

Superannuation in Australia is currently 9.5 per cent – which means that your employer must pay you superannuation equivalent to 9.5 per cent of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

How do you calculate superannuation?

Superannuation is calculated at the rate of 9.5 per cent of your gross salary and wages. So if you had a salary of $50,000, your superannuation would be 9.5 per cent of that, or $4,750. This would be paid on top of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

Who can open a superannuation account?

Superannuation accounts can be opened by Australians, permanent residents and temporary residents. You’re automatically entitled to superannuation if:

  • You’re over 18 and earn more than $450 before tax in a calendar month
  • You’re under 18, you work more than 30 hours per week and you earn more than $450 before tax in a calendar month

Is superannuation taxed?

Superannuation is taxed. It is generally taxed at 15 per cent. However, if you earn less than $37,000, you will be automatically reimbursed up to $500 of the tax you paid. Also, if your income plus concessional superannuation contributions exceed $250,000, you will also be charged Division 293 tax. This is an extra 15 per cent tax on your concessional contributions or the amount above $250,000 – whichever is lesser.

What is superannuation?

Superannuation is money set aside for your retirement. This money is automatically paid into your superannuation fund by your employer.

What is a superannuation fund?

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

  • Retail funds
  • Industry funds
  • Public sector funds
  • Corporate funds
  • Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.

What is the age pension's income test?

These are the rules for most people who want to claim the standard pension:

Single people

  • If your income per fortnight is up to $168, you’re entitled to a full pension
  • If your income per fortnight is over $168, your pension will reduce by 50 cents for each dollar over $168

Couples

  • If your income per fortnight is up to $300, you’re entitled to a full pension
  • If your income per fortnight is over $300, your pension will reduce by 50 cents for each dollar over $300

These are the rules for most people who want to claim the transitional pension:

Single people

  • If your income per fortnight is up to $168, you’re entitled to a full pension
  • If your income per fortnight is over $168, your pension will reduce by 40 cents for each dollar over $168

Couples

  • If your income per fortnight is up to $300, you’re entitled to a full pension
  • If your income per fortnight is over $300, your pension will reduce by 40 cents for each dollar over $300

For most people, the age pension cuts off if your fortnightly income exceeds these thresholds:

Category Fortnightly income
Standard pension for singles $1,944.60
Standard pension for couples living together $2,978.40
Standard pension for couples living apart due to ill health $3,853.20
Transitional pension for singles $2,038.00
Transitional pension for couples living together $3,317.00
Transitional pension for couples living apart due to ill health $4,040.00

What superannuation details do I give to my employer?

When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You should also provide your tax file number – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

How do I combine several superannuation accounts into one account?

The process used to consolidate several superannuation accounts into one is the same process used to change superannuation funds. This can be done through your MyGov account or by filling out a rollover form and sending it to your chosen fund.

What are ethical investment superannuation funds?

Ethical investment funds limit themselves to making ‘ethical’ investments (which each fund defines according to its own principles). For example, ethical funds might avoid investing in companies or industries that are linked to human suffering or environmental damage.