Women are starting to bridge the super gap
Women are starting to bridge the super gap. Photo: Getty
Women’s superannuation balances famously lag well behind those of men.
But change is afoot, with new research from Roy Morgan showing women have significantly improved their financial positions over eight years.
Average investment balances are now 63 per cent of the male average in the pre-retirement phase. These include both superannuation and other savings and investments.
But back in 2008, women’s investments averaged only 57.7 of men’s in the pre-retirement years between ages 50 and 64.
The improvement is a result of women growing their investment balances faster than men. Men’s average balances are now $386,000 compared to women’s balances, which average $232,000.
Over the past eight years, the average investment balance for women in the pre-retirement phase has risen by 26.8 per cent while men’s balances are up 16.1 per cent.
There is some evidence of an evening up of the super equation buried in the latest figures from the Australian Bureau of Statistics which are not as current as Roy Morgan’s work.
The ABS figures for 2013-4 show that while men aged between 55 and 64 have super balances 79 per cent higher than women, in the younger cohorts things are different.
Women in the 25 to 34 year age group are outgunned by male balances by only 22.9 per cent.
Independent economist Stephen Koukoulas says there are a number of factors driving the improvement in inter-gender super equity.
Compulsory super has only been in existence 24 years and women’s workforce participation rates have risen in recent decades meaning more younger women are getting the chance to build balances than in the past, he said.
“More women now go to university than young men and there’s an evening up of salaries in some professions, so women get the chance to build up more super.”
The hidden cost of kids
Research house Canstar has put a figure on the price women pay for child rearing. If a woman and a man start work at 21 and the same wages and investment conditions apply over their working lives the effect of five years out of the workforce raising kids between 30 and 35 is stark.
The woman retires with 20 per cent less in super than the man, as the following table shows. Don’t be shocked by the figures as inflation is not taken out and the value of $2 million in 44 years’ time will be a fraction of its current value.
Investment eggs not all in super
Interestingly both men and women in the pre-retirement life phase have almost as much invested outside super than in super, Roy Morgan found. Men in work have $470,000 in total investments with 54 per cent of that in super. Women in pre-retirement who work have average assets of $318,000, 53 per cent of which is in super.
The above chart shows those details and factors in average debt levels. With debt netted out women in the survey group have an average of $232,000 while men have $386,000.
Owner-occupied housing is not factored into the wealth figures.
When the super figures are broken out of the chart, women in pre-retirement have balances 66 per cent as large as men. That is a smaller differential than shown by the ABS figures and may result from different survey methods and different timeframes.
“Over recent years a great deal of publicity has been given to the issue of the inequality in superannuation for women compared to men. Although progress is slow, there are now signs that the gap in retirement funding is gradually closing.”
“This has been partly as a result of increased awareness and effort to improve the retirement funding for women along with their increased participation in the workforce,” said Norman Morris, industry communications director with Roy Morgan Research.
It’s not all rosy
While the situation in super is improving, there are major societal factors holding women back financially.
“There is still a problem, as men on average earn 17 per cent more than women. There’s also a strong propensity for women to take time out of the workforce for child rearing,” Mr Koukoulas said.
“So there won’t be equality in super till those factors are addressed.”
