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Byron Shire
February 6, 2023

Government modelling fails to reflect women’s interrupted careers

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New research to be released this week analyses two decades of Household, Income and Labour Dynamics in Australia (HILDA) Survey to estimate the actual labour force experience of women over their life and accounts for working when super is not paid.

The research reveals three-quarters of women are unlikely to retire having received a full 40 years of super contributions, and yet key government modelling assumes everyone retires with four decades of super.

Twenty per cent of women won’t receive 40 years of super

For the bottom fifth of female wage earners there is less than a 5% chance they will receive super for 40 years. Across all income percentiles women average just 30.1 years of contributions, the male average is 36.2 years.

It highlights a dramatic flaw in the Retirement Income Review base case modelling which assumes everyone receives 40-years of super contributions – leading to big overestimates in retirement balances.

The Retirement Income Review’s findings are being waved around by politicians to claim legislated increases in the Super Guarantee (SG) are unnecessary and should be cut or used for other purposes.

ISA’s research also accounts for those who fall into the $450 monthly threshold trap – when super is not paid to an employee who earns less than $450 a month. Women are far more likely to have multiple part-time jobs – which may all fall below the super contribution payment threshold. This threshold should be abolished.

Industry Super Australia strategic engagement director Gemma Pinnell says that it is time we bridged the gender gap in super. ‘More women than men are likely to receive a super guarantee increase, so lifting the rate is a crucial part of the solution.’

Until we fix inequities in the super system, like the outdated $450 threshold, we will continue to see women retiring with balances that are persistently lower than men.’

An average 12 years less in the full-time work than men

A recent retirement survey, commissioned by ISA, found that on average women spend 12 years less in the full-time workforce than men, this time away from work is having a dramatic impact on their super balance.

Previous ISA research shows that men have $282 billion more than women in their super funds.

Analysis of ATO tax file median balances reveals women retire with 36 per cent less super than men. But as the table below shows women have less super at every stage in life. Lifting the rate to 12% as legislated is a vital tool to lift women’s savings – with more women than men likely to receive the super rate increase.

The super balance gender gap begins to expand when a woman hits her 30s, the super balance gap increases from just under 7% in their late 20’s to almost 35 per cent once a woman reaches her late 40s (see table 1 below).

Men receive $12 billion more in employer contributions

Men also receive $12 billion more in employer contributions each year than women. One in three women retire with no super balance at all, according to a 2016 Senate report.

Industry Super Australia deputy chief executive Matt Linden says the modelling which is based on wrong assumptions, has real life ramifications. ‘Some wish to use the Retirement Income Review’s findings to cut super for millions who otherwise wouldn’t save enough for retirement.

‘This would be a terrible outcome as a more realistic working life pattern shows the current super rate is not adequate for most women to fund a secure retirement.’

The gender super gap at different life stages

median balance
Female median balance Gender
20-24 $6,636 $6,104 8.0%
25-29 $21,619 $20,187 6.6%
30-34 $45,884 $38,389 16.3%
35-39 $73,247 $56,568 22.8%
40-44 $101,952 $71,087 30.3%
45-49 $127,905 $83,582 34.7%
50-54 $150,622 $96,872 35.7%
55-59 $176,072 $117,470 33.3%
60-64 $204,107 $146,900 28.0%
All $64,381 $47,215 26.7%

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  1. WELL, I suppose this is a convincing argument to make it compulsory for women to work longer hours, and not keep taking time off to live their lives when ever it suits them. They could pay more into the ‘never, never fund’ which is super, and live on hope that the money would still be there, when their too old to enjoy it.
    If it hasn’t occurred to you yet, the whole superannuation scheme is a con, a giant ponzi that is unsustainable…… and at it’s best is theft from future generations, for the benefit of those already too well remunerated.
    Cheers G”)

    • I am assuming that you are being sarcastic when you say: ‘I suppose this is a convincing argument to make it compulsory for women to work longer hours, and not keep taking time off to live their lives when ever it suits them’, because I am sure you couldn’t possibly be serious – because, that would make you an idiot.

      Women who are homemakers AS WELL as in the workforce, ALREADY do work longer hours – it’s called motherhood and house keeping. Many women already work longer hours than men – alas, there is no super find for breastfeeding and nappy changing and school drop offs and washing and ironing and scrubbing the toilet…

  2. There is no single measure that could rectify this problem. But, until the problem is recognised, no measures will be implemented. But an even bigger starting point is that conservative governments, inculcated as they are with the ideas of the Institute of Public Affairs and as confirmed by the incessant caterwauling of Tim Wilson himself a former IPA flunkie parachuted into the parliament), LOATHES mandatory super. Even if we can get over that “little” ideological hurdle, which could be problematic, because people keep refusing to see how much damage a corrupt, policy-free and inept Coalition is doing to this country and re-electing them; how do we assist women who choose to be out of the workforce to focus on family to boost super? Agree that the $450 threshold for no super is way out-of date and could be removed (after all, it is clear government policy to promote a more casualised workforce – compared to 1992 when compulsory super was introduced). Perhaps tax-free (i.e., no super fund tax of 15%) personal contributions for anyone (men and women) on a low income (while concessional contributions are taxed in the super fund, no point topping up super by increasing contributions to the $25,000 cap unless you have taxable income of at least $43,200pa – a bit more with low income and LISTO rebates). After all, if I make a $1.0 million profit on the sale of a business asset, I could, with a bit of planning, get $500,000 into super tax-free. Why should low-income earners still be taxed on their super contributions? Perhaps no tax on earnings of low super balances and higher contribution caps for women over, say 35 or 40 so that when they do have the kids in school and want more working hours and have higher income, they have some incentive to catch up lost contributions . How about more generous measures to allow working spouses to direct more of their super to their non-working spouse, or allowing a spouse on, say, $100,000 per year, to file a joint return with a non-working spouse, so the non-working spouse can make some super contributions tax effectively (isn’t this better than the Coalition giving tax cuts to higher income earners and lying that it is about reversing “bracket creep” – which it won’t, at least not significantly over the longer term). Ideally, you still want women to be putting money into super in their 20’s and 30’s to maximise the benefit of compounding.


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