Retirement savings gap moving in the right direction

The median retirement savings gap for women is 23.4% less than men, down from the 47% gap figure cited by commentators, according to research.

However, according to the Association of Superannuation Funds of Australia (ASFA) research, median figures were still well short of the amounts needed to support a comfortable standard of living in retirement.

ASFA chief executive, Martin Fahy, said: "While there is still much work to be done, pleasingly we are starting to move in the right direction in terms of closing the gap between the retirement savings of men and women.”

Over the two years to June 2019 the average balance for males grew by 10.8%, while for females it grew by 12%. Females held around 42.5% of total superannuation assets, up from 41.9% two years before.

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For individuals aged 60-64 in June 2019 the average balance for males was $359,870 with a median of $178,800 and for females the average was $289,180 with a median of $137,050. The retirement savings gap based on the median figures was 23.4%.

Fahy said: "While it will be more than 30 years before most individuals in retirement will have had the full benefit of the Superannuation Guarantee, the proportion of new retirees who are fully self-funded has been increasing.

"Moving compulsory contributions to 12%, as is legislated, together with other targeted policy measures is necessary to reduce the retirement savings gap for many Australians.”

Taking time out of the paid labour force for family responsibilities had a big impact on the superannuation balances of women at retirement. Analysis in the paper indicated that taking a year off for each of two children could lead to 10% less in superannuation at the time of retirement.

ASFA analysis also showed that the introduction of a $5,000 Superannuation Baby Bonus together with payment of the Superannuation Guarantee on paid parental leave would largely eliminate this deficit.

The paper also contained data on the superannuation of Aboriginal and Torres Strait Islanders and of persons who were born in non-English speaking countries. On average, their super balances were lower than for the population as a whole. Targeted measures, such as extension of the Low Income Superannuation Tax Offset, would assist these groups and low income earners more generally, according to ASFA.