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Using longitudinal data based on a sample of member accounts provided by a major Australian superannuation fund, we examine the question of whether established gender-derived savings gaps are likely to diminish in the future. We find that older males increasingly dominate the higher earnings groups and, although there is some evidence that women’s balances proportionate to men’s are improving over time, the rate of improvement is virtually imperceptible. There is little sign that young women’s engagement with the labour market in Australia is changing, with career breaks and part-time working by women remaining the strategy of choice for the care of babies and young children. The compound interest accruing to lower balances in mid-working life exacerbates the gap between male and female super savings which expands over the final years before retirement.*

This research seeks to analyse how market mechanisms interact with female labour market participation patterns to generate lower savings. While the results here are specific to Australia, they have implications for the development of funded pension systems worldwide.

Concluding remarks

While further analysis is required to paint a fuller picture, our key findings are:

  • Male and female retirement outcomes (based on various measurements) are rarely the same: This indicates that structural features in this type of scheme create a gender bias that, as many surveys indicate, undermines the chances of women being able to generate the same superannuation savings as men.
  • Much of this discrepancy occurs early in working life, and is largely attributable to gaps in younger women’s contributory record: Younger women tend to leave work or work part-time during the years of family formation, a conclusion supported by our data on the higher levels of contribution irregularity and wider spreads of inequality found among younger females.
  • The decision to work part-time/take career breaks in early working life appears to affect future income in an adverse way: The gender distribution of men and women in our contribution-based earnings quartiles demonstrates how older males increasingly dominate the higher earnings groups. Note that there is some evidence that women’s balances proportionate to men’s are improving over time, but the rate of improvement is virtually imperceptible.

Over the period from 2002−03 to 2011−12, there is little sign that young women’s engagement with the labour market in Australia is changing. The data suggests that career breaks and part-time working remain the strategy of choice for coping with the care of babies and young children – and that the mother is the person who takes this on.

This means that, in early working life, the flow of contributions into superannuation savings slows or stops temporarily.

This has two major consequences. First, as widely acknowledged, a return to full-time work in the mid-40s certainly stabilises the interrelationship between male and female contribution rates, but the price in terms of promotion and associated workplace opportunities has already been paid and female balances are much lower.

Second, the super balances for older women are lower due to a less regular contribution flow – and the compound interest accruing to lower balances in mid-working life exacerbates the gap between male and female super savings which expands over the final years before retirement. The penalty motherhood apparently exerts on women’s income security in old age has long been – and remains – peculiarly marked. There is little evidence in our data to suggest that this situation will solve itself. On the contrary, there is every reason to expect that for the next half century or more, Australian women without the support of a spouse will continue to rely overwhelmingly on the age pension.

Much of the recent response to gender inequalities in pension saving has been to encourage women to save more – in Australia, through salary sacrifice or by taking advantage of the state supplements the federal government is beginning to offer the low paid. Because women live longer, the argument is made that they should save more in order to ensure that their funds are sufficient to meet their needs in later life.

This is an inadequate response that will not bridge the gap revealed here and fewer women are taking up the tax advantaged pre-tax savings options. More constructive suggestions involve including contributions from maternity pay in the Super Guarantee, but this only offers a very partial compensation.

There are other factors that may threaten the future of Australian superannuation. Australia has enjoyed nearly 20 years of prosperity, relatively full employment and good returns on invested funds. However, the data indicates that new entrants into the superannuation scheme are not attaining the savings of their older siblings, that the GFC may have exerted a greater influence than previously supposed on jobs for young people and thus on their savings for the future.

Further research will be able to verify this conclusion more definitively, but future safeguards will be needed if this type of personal savings system is going to offer a viable and secure retirement for all Australian citizens.

*We gratefully acknowledge Mercer Australia for the provision of data. We also acknowledge the support of David Cox in facilitating the data use and its understanding.


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This Working Paper was produced by the CSIRO-Monash Superannuation Research Cluster a collaboration between the CSIRO and Monash University, the University of Western Australia, Griffith University and the University of Warwick in the United Kingdom. In addition, the Cluster engages on an ongoing basis with a range of industry supporters, government agencies and industry peak bodies who assist in providing guidance and feedback to researchers, providing data, and in disseminating outcomes. The purpose of the Super Research Cluster is to examine issues pertaining to the future of Australia’s superannuation and retirement systems.