Closing the gap with respect to women’s retirement incomes is a challenge best surmounted via a political unity ticket, Mike Taylor writes.
Over the past half-decade, to a greater or lesser degree, the four major banks have launched campaigns aimed at addressing the issues around women’s wealth accumulation.
The latest bank to pursue such an agenda has been ANZ, but it has been only a year or so since Westpac/BT vocally pursued a similar agenda, as have the Commonwealth Bank and National Australia Bank.
Why do they do so? Because women represent around half of the Australian population and the underlying data is undeniable — due to a range of factors including broken work lives and family circumstances, women emerge at a substantial disadvantage to men in the retirement income stakes.
Research released at the recent Financial Services Council annual conference suggested that a superannuation guarantee contribution of 18 per cent would be required to bridge the gap between the retirement incomes of men and women.
But as challenging as the size of the retirement incomes gap may be, the means of addressing the problem are not particularly complex. Indeed, the Government already broadly knows the combination of policy responses which would be required.
That is why Money Management and its sister publication, Super Review, have embarked on a project aimed at ensuring that the policy options which might be pursued by the Government are appropriately canvassed by the people most affected — women. That process will begin with a Women’s Wealth breakfast in Sydney on 10 September.
However, there is no denying that the Government already knows the broad policy answers because they have been traversed in a range of reports, including the Financial System Inquiry, and have been canvassed by the Assistant Treasurer, Josh Frydenberg.
In his late August address to the Tax Institute, Frydenberg directly referenced proposals to change the rules on contributions to superannuation, especially to increase the flexibility of the caps and referenced the dilemma confronted by women when he said submission had also indicated “that there is considerable interest in facilitating catch-up contributions by people with broken work patterns”.
The Assistant Treasurer then went on to cite the recent ANZ Women’s Report and consequent public discussion, which he said had raised the issue of women’s superannuation balances and the fact that Australian women earn on average $700,000 less than men over a 45-year career.
“The tax reform process gives us the opportunity to see if there is anything more that can be done, particularly around the flexibility for contributions. There is also a new reference to the Senate Economics Committee for an Inquiry into ‘Economic security for Women in Retirement’ for report by the first sitting day in March 2016. This Inquiry will provide a targeted opportunity to examine these issues.”
This is all good stuff from the minister, but the problem for the discussion around achieving better outcomes for women is that the current timetable being indicated by the minister clashes significantly with the electoral calendar. In other words, around the time the Government gets to consider the findings of the Senate Economic Committee in March, next year, it will also be in serious election mode.
That is why when the major parties discuss a common, bi-partisan “objective” for superannuation, they should also agree the bipartisan pursuit of equity for women in terms of retirement outcomes. In doing so, the major parties might find that they are not only benefitting women but also sensibly updating the superannuation system via initiatives such as lifetime contribution caps.
Where delivering equity to women with respect to retirement incomes is concerned, the challenges are considerable but certainly not insurmountable.
Mike Taylor – Managing Editor
