It's time to close the gap: Women need paid super on parental leave now

The Australian Institute of Superannuation Trustees (AIST) has called for the Federal Government to use International Women’s Day as an opportunity to close the gap on women’s retirement funds by extending superannuation to paid parental leave.

AIST CEO Eva Scheerlinck said women were disadvantaged most by the fact that parental leave was the only paid leave that did not include superannuation because women accounted for more than 90 per cent of all parental leave taken by primary carers.

Women disadvantaged by the current system

“For every dollar a man earns, a woman earns 67 cents on average, and women have 40 per cent less superannuation on retirement and live longer, which is hardly a recipe for the comfortable retirement that they deserve,” Scheerlinck said.

“They also spend more time out of the workforce doing unpaid work caring for children and other family members, which is even more reason that action should be taken to ensure they don’t fall further behind during career breaks.

“Super on paid parental leave would allow parents to continue building their retirement savings while taking time out of the paid workforce to care for children.”

Super payment would improve gender equity

Scheerlinck said the addition of a super payment on paid parental leave would be another step to improving the fairness, equity, adequacy, and transparency of the existing retirement savings system.

“The recent passing of legislation scrapping the $450 monthly salary threshold for super payments was good news for low income workers, many of whom are women, but more action is needed,” Scheerlinck said.

“This includes maintaining the commitment to the legislated increase in the Superannuation Guarantee to 12% by 2025, addressing the gender pay gap, and assessing the level of financial coercion experienced by women through the early release of superannuation scheme.”

Super Fierce to address gender equity

The callout comes as a new wealth tech platform launches to address the global gender wealth gap.

Aussie fintech Super Fierce has launched a scalable advice platform in time for International Women’s Day, after closing a $1.5M seed round.

The platform aims to address the $30T global gender wealth gap, beginning with the 47 per cent superannuation gap currently facing Australian women in retirement.

Founder & CEO Trenna Probert has her own personal story of financial hardship that saw her having to borrow money to leave a problematic relationship with an 18-month-old baby.

Super Fierce now aims to save women $100 million in lifetime superannuation fees by July 2022 and, as of February, has already saved Australian women $25 million.

It’s time to end the savings retirement gap for women

Probert said there are many studies that have tried to calculate the superannuation retirement gap, and the findings range between 34 to 67 per cent.

“Many of these studies, however, incorrectly exclude the huge number of people that retire with no super at all, and the vast majority of those are women. So these numbers are much lower than reality.

“Our calculations suggest the median super balance at retirement for women is 50 per cent lower than for men, and we believe this is unacceptable.

“There is a particularly high penalty for mothers, which is ridiculous given parenting is the one thing that no society or economy can do without. The average penalty is $280,000 for a woman with two children who takes an average six years out of paid work and then returns to part-time work.

According to the Grattan Institute, the average Australian woman will earn $2 million less than the average Australian man over her lifetime. While a recent study, by Australian Super found the average woman will retire with 47 per cent less in super than men.

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