The Government is committed to achieving economic security for all Australian women to enable them to be independent and empowered.
We know that a woman’s level of paid and unpaid work determines her economic security over the course of her life — the more a woman undertakes paid work, the greater her likelihood of a financially secure working life and retirement.
We also know that the Australian labour market is highly gender segregated in both occupations and industries. Men tend to work in industries such as construction, mining and manufacturing. In contrast, women account for more than 70 per cent of all employees in the education and training and the health care and social assistance industries. Gender segregation also refers to the tendency of women and men to study different fields and how women and men participate (full-time or part-time) in the labour market.
Women are more likely to work part-time or casually, take breaks from paid employment to provide unpaid care for others, and be over-represented in lower paid industries and occupations, resulting in lower earnings and retirement savings compared to men.
That is why the Government has implemented a number of measures to enable women to boost their superannuation and reduce the gender pay gap.
Improving financial literacy will also help ensure women properly understand the financial implications of working, working more hours, getting a pay rise and what their retirement savings will look like.
The Government is helping women to save more for retirement because women retire with less than half the superannuation of men. The average superannuation balance in 2013 14 was $138,150 for women and $292,500 for men.
Where are we?
The Government has taken significant steps to increase women’s economic security in retirement through a number of measures designed to boost women’s superannuation balances.
The Paid Parental Leave scheme aims to extend mothers’ time away from paid work, while increasing lifetime attachment to the labour force. In 2015–16, 169,745 mothers start receiving Parental Leave Payment.
The Low Income Superannuation Tax Offset reduces the tax on superannuation contributions for low income earners, of whom a high proportion are women. The offset will ensure low income earners are generally not paying more tax on savings placed in superannuation than they do on income earned outside of superannuation.
More people can claim a tax offset (up to $540) for contributions to superannuation for their low income spouse by increasing the income test threshold for the recipient spouse from $10,800 to $37,000. This will allow more people who make contributions to their low income spouses to benefit from the tax offset, helping low income earners, a high proportion of whom are women, to build their superannuation balances.
From 1 July 2018, any unused concessional superannuation contributions will be able to be carried forward for up to five years for women with superannuation balances of $500,000 and lower.
The Government also contributes up to $500 per year to low or middle income earners who make after-tax superannuation contributions. Women make up a majority of the beneficiaries of these contributions — in 2014–15, 300,000 low and middle income women were entitled to $90 million of co-contributions.
Contribution splitting allows people to help their spouse accumulate their own superannuation by ‘splitting’ up to 85 per cent of their concessional contributions in a year, and broadens superannuation to individuals outside the workforce, a majority of whom are women.
The Government’s efforts to close the gender pay gap also play a key role in increasing women’s economic security. The WGEA works with the private sector and provides a number of resources to assist employers to close the gender pay gap.
Key actions 2017-18
- Introduce the new measure that will allow any unused concessional superannuation contributions to be carried forward, for up to five years, for women with superannuation balances of $500,000 and less from 1 July 2018. 97 per cent of women with a superannuation account have a balance under $500,000 and will clearly benefit from this change.
- Strengthen the National Financial Literacy Strategy to improve the scope and depth of financial literacy resources for women to improve their financial capabilities at key life events (such as having and caring for children, managing divorce and separation, and caring for ageing family members). This includes partnering with organisations that support women when they are facing changing and/or challenging financial circumstances. Australian Securities and Investments Commission (ASIC) has received $16 million in additional funding for this and other initiatives under the Strategy.
- Expand the reach and content of ASIC’s Women's Money Toolkit, a free online resource to provide women with the knowledge and confidence to manage their finances and achieve their financial goals.
- Work with the Australian Human Rights Commission to prepare guidelines to give greater certainty to employers about the lawfulness of any actions they may wish to take to reduce the gender retirement savings gap. Employers might assume that it would be a breach of the Sex Discrimination Act to make additional payments to women to counteract the loss of retirement savings if, for example, they have taken time off work to care for their children. The Sex Discrimination Act allows a person to take ‘special measures’ to achieve substantive equality between men and women, which do not constitute unlawful discrimination. An example of such an initiative is ANZ who make super contributions to all employees for any period of paid and unpaid parental leave taken.
- Continue to work with the Workplace Gender Equality Agency to provide employers with resources on closing the gender pay gap, and requiring private sector employers with 100 or more employees to report on key gender indicators.
- Continue to use Women’s Leadership and Development Strategy grants to encourage both women and men into non-traditional roles to break down occupational segregation.
- Continue to support campaigns such as the Workplace Gender Equality Agency campaign Women’s Work/Men’s Work.
- Work with industries to get women into traditionally ‘male’ industries and roles, for example Australian Women in Resources Alliance e-mentoring program, an initiative of the Australian Mines and Metals Association.
- WGEA (2015) Perspective Paper: Women’s economic security in retirement. https://www.wgea.gov.au/sites/default/files/PP_womens_economic_security_in_retirement.pdf.
- Department of Employment (2017) Submission to the Inquiry into gender segregation in the workplace and its impact on women’s economic equality http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Finance_and_Public_Administration/Gendersegregation/Submissions [accessed 16 June 2017]