Joint superannuation accounts touted as fix for gender savings gap

Joint superannuation accounts should be introduced to bridge the retirement savings gap between men and women, a key industry executive has said.

And Assistant Superannuation Minister Senator Jane Hume said she is open to bringing them in.

Just a week after the Morrison government was criticised for handing down a blue budget for a pink recession, Aware Super CEO Deanne Stewart told an online forum hosted by Household Capital that women were retiring with 43 per cent less in their superannuation than men.

Ms Stewart said wage differences accounted for two-thirds of the savings gap – which was calculated from an analysis of Aware Super’s one million members – and career breaks accounted for the remaining one-third.

“Now, those wage differences are for various different reasons,” she said.

“They might be the different types of roles that they’re in; the fact that women tend to work more part-time; and then, thirdly, that gender pay gap.”

Ms Stewart said raising the superannuation guarantee to 12 per cent of wages, as is currently legislated, would “without a doubt” be the most effective solution to the problem.

But she provided several other suggestions, too.

“One is actually to consider joint super accounts,” Ms Stewart said.

“If you think about it, in many households, you’ve got most partners working, and the ability to contribute into the super fund if someone is taking time out or taking career leave.

“But also, later in life, if there is a separation in the family, that actually really assists in having a much more equal super balance. So that’s one thing to consider.”

Superannuation consultants Mercer and research house Rice Warner put forward similar suggestions as part of their submissions to the Retirement Incomes Review – the final report for which has been sitting on the Treasurer’s desk since July.

Senator Jane Hume, who is the minister responsible for superannuation, also took part in the online forum and was also asked about the difference in retirement savings between men and women.

“Superannuation on paid parental leave is something that I know has come up over and over again and is something that is probably worth considering,” she said, when asked about potential solutions.

“The joint accounts – I quite like that idea and it’s something that should be considered also.

“However, we also know that those that are retiring – particularly women – on that lower superannuation balance tend to be singles, so I don’t know whether joint accounts necessarily would solve that problem either.

“But I think it’s worth consideration.”

Senator Hume said the savings gap between men and women was caused by “a design fault with superannuation, because super will always be reflective of your working life”.

She said the solutions fell into two categories: Superannuation policies that compensate for gender inequality experienced during members’ working lives, and broader policies aimed at levelling the playing field for women before they enter retirement.

“And I’ve got to say, one of the things I was most proud of, at the beginning of this year, was that we had a higher rate of female participation rate in the workforce than we had ever seen before,” Senator Hume told the online forum.

“The gender pay gap had closed accordingly, from around 17.5 per cent four or five years ago, to around 14.2 per cent at the beginning of this year.

“That made a real difference, and would be making a difference to that gender retirement gap.”

https://twitter.com/HouseholdCapit1/status/1315825921861971969

Many advocates would challenge Senator Hume’s rosy outlook, though.

Although the gender pay gap fell to a record low at the beginning of the year, experts say the pace of progress had slowed dramatically in recent years.

And the latest Financy Women’s Index shows the pandemic has added four years to the estimated time it will take to achieve economic gender equality in Australia – meaning a level playing field between men and women is now at least 36 years away.