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What women want: A more equitable super system

Treasury announced another consultation into super on Monday 20 February. Ever since, the trade media, the consumer media and even social media have been abuzz with speculation about what it might mean for the May Federal Budget.

Speculation of the return of Reasonable Benefit Limits and the superannuation surcharge and what the thresholds might be have the super industry worked into a frenzy. But as the latest MYMAVINS research shows, the ideology of the super wars may be distracting us from a bigger issue.

Legislating the purpose of super

As we all know, this time the consultation centres on the purpose of super. Treasury has put forward a sensible proposition: the objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.

Much of the industry debate to date has focused on equity between the rich and the poor. It’s a captivating conversation because there are several SMSFs housing eye watering amounts of family wealth. But keep in mind that we are seeing the long tail of a legacy issue closed three decades ago; the HAS-based RBL system.

The greatest happiness for the greatest number

One way to gauge the success of policy is through the philosophical lens of modern utilitarianism. Its central premise is based on seeking the greatest happiness for the greatest number of people.

The Retirement Income Review Report notes at least 11,000 Australians who have more than $5 million in super. Whether or not we diminish the happiness of these 11,000 may be somewhat of a distraction when looking at the bigger picture.

Looking closer to the reality of everyday Australian balances (according to ASFA super account balance research reported in 2022) finds the median super balance for men aged 60 to 64 years old close to $179k while only $137k for women. This is close to a 25% difference, notwithstanding both these median balances being considerably below what is needed to fund a comfortable retirement these days.

The other half

A recent research study designed by MYMAVINS for Australian Seniors, The Super Savvy Report 2023, surveyed just over 5,000 Australians over age 50 about their attitudes to superannuation and retirement. The research confirms just how much work is yet to be done to improve Australian's retirement outcomes - particularly in closing the gender gap experienced by women.

Nine in 10 women recognised there is a gender gap in super balances between men and women, with the main reason being career punctuation to take care of their families.

The study also found women tend to be less confident in their financial position, their financial capabilities, and in recovering from a recession than men. Women are also less aware of super strategies like splitting contributions and making additional contributions that could help close the gap.

Enshrining equity for women in super

Having equity enshrined in the legislative purpose of super is a good thing for everyone. Closing the gender super gap benefits women, and ultimately their families, the superannuation industry, the economy and the public system.

It’s time for a bold new conversation about the purpose of super. A great start would be providing super on paid parental leave.

Jason Andriessen is a consulting partner at MYMAVINS

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