This social enterprise wants to reduce the $283K hit to mothers’ super

Wealthtech social enterprise platform Super Fierce has calculated that the average Australian mother will face a $283,000 hit to her superannuation savings by the point of retirement.

Productivity Commission data shows the average Australian mother has a median of two children within five years; takes 32 weeks’ full-time maternity leave for each child; and returns to work an average of 3.5 days’ per week until the youngest is 18 years old. Australian Institute of Health & Welfare (AIHW) found the average Australian mother has her first baby at 29.4 years.

Based on these averages, Super Fierce calculated that until children reach five years of age, reduced work hours results in around $8,000 per annum less Compulsory Superannuation Guarantee contributions, adding up to $44,000 post-tax.

The loss of earnings trajectory for this average mother versus her peers who didn’t take time-out (9 percent for two children) reduces contributions by $90,000 over the following 30 years of work. Reduced work hours after children are over five years of age adds an additional $56,000 cumulative impact.

Finally, the compounding impact of the combined $190,000 ($44,000 + $90,000 + $56,000) then also not earning investment returns in super means an extra $93,000 lost.

This adds up to a staggering $283,000 (present day value) in total lost super savings – and this figure doesn’t even account for the current gender pay gap.

Steps to address the imbalance

But Super Fierce co-founder and CEO, Trenna Probert, believes there are ways to address the imbalance.

“The figures may appear bleak, but our calculations show that if a woman switches to the lowest-cost super fund at the average age women have their first child, 29.4 years, then she could save around $239,486 in super fees over her lifetime,” says Probert. “That’s an extra $343.57 in her pocket each week once she retires, or an extra $50 a day.”

Super Fierce is also recommending a new type of “push present” (a present given to a new mother by her partner): a contribution to a woman’s super by her partner.

“Children don’t just happen to women. Most often the choice to have children is a joint one, so it doesn’t make sense that women disproportionately bear the financial burden, on top of the physical burden and impact on their general independence,” says Probert. “So instead of flowers, soft toys, and spa vouchers we never get to use, push up the value of a mother’s superannuation. A top-up of around $10,000, in combination with switching to a lower fee fund, could help to reduce the super penalty facing new mothers to nil.”

Lived experience adds value

Probert co-founded Super Fierce with husband Craig Swanger. She had experienced severe financial hardship when she left an earlier relationship, struggling to put food on the table for her 18-month-old son. The wealth advice platform and social enterprise helps women close the gender wealth and retirement gap.

When Probert and Swanger became pregnant with their son Kit (now nine years old), Craig recognised the disparities women face when it comes to super. He stepped in and made regular contributions to Trenna’s beneficiary account until their joint SMSF reached 50/50.

“The gender retirement gap is caused by two fundamental issues: the gender pay gap and the role of women as carers,” says Swanger. “The gender pay gap will take too long to fix for my daughter, and sadly even for her daughters. But understanding how the super system works means that today’s working women can help to reverse the financial impacts of their role as carers. As a father and husband, I absolutely wanted to play my role in contributing to reducing the disparity too.”

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