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Woman and savings

Sex Discrimination

Woman and savings

Speech by Pru Goward at the The
ASFA 2004 National Conference and Super Expo, Adelaide, 11 November 2004.


  • Michaela Anderson, Director
    of Policy and Research, the Association of Superannuation Funds of Australia
    (Chair)
  • Judith van Unen, Immediate
    Past President, Australian Federation of Business and Professional Women.
    (panel member)
  • Thank you for inviting
    me here today. I am delighted to address ASFA's Saving for the Nation conference
    here in Adelaide. I am particularly pleased to be able to make a contribution
    in the women's superannuation and saving debate.
  • I don't think there's
    any doubt that Australia's current superannuation arrangements are not working
    for women.
  • There have been great
    improvements in superannuation law- improvements in the share of superannuation
    after divorce, greater portability, the ability to combine accounts and for
    those in paid work to contribute to the superannuation of their spouses, government
    co-contribution for low-income earners- to name a few.
  • These improvements coupled
    with introduction of superannuation contributions through centralized industrial
    awards in 1985 and the introduction of mandatory superannuation contributions
    by SGC in 1992, have gone someway to redressing the imbalance between the
    superannuation of men and women.
  • But there are studies
    confirming the super gap still persists.
  • Statistics from the
    HILDA survey of 2002 and referred to in Ross Clare's research paper demonstrate
    that currently women with superannuation by the age of 60, will have half
    the average account balance at the time of retirement as that of men.
  • As Ross has said, this
    disparity between women's and men's super begins at about age 25 and progressively
    increases with age. One in six 35-44 year old males had super balances of
    over $100,000 compared with only one in twelve women.
  • Already women are two
    and a half times more likely to live in poverty in their old age than men,
    because they have contributed so much less to superannuation.[1]
  • By the year 2019, men,
    on average, will have accumulated double the superannuation that women, on
    average, will have done.
  • That will be after a
    life time of 9 or 12 percent superannuation contributions.
  • With the average age
    of retirement expected to be 59 for women (60 for men) this imbalance is of
    real concern. The outcomes of the survey conducted by ANOP for ASFA suggests
    that the mean actual retirement age is 57 for men and 55 for women and that
    it is likely both men and women may retire earlier than anticipated ....and women
    will be living on less.
  • One of the sad ironies
    is that women need more, not less super than men
  • Not only are they retiring
    earlier, they are, on average, living longer than men. Women's life expectancy
    is 82 years, compared with 78 years for men. That's four years more living
    costs to find. And the UN predicts life expectancy to continue to rise as
    the population ages, while the population of young people stabilizes
  • And the days of Darby
    and Joan retirements are long gone for so many.
  • Higher divorce rates
    and lower remarriage levels particularly in later stages of life are expected
    to result in more women living alone and being dependent on their own financial
    resources.
  • Under the old Australian
    welfare settlement, none of this mattered much. Australians died in their
    sixties and those that actually made it to retirement lived in modest circumstances
    on a pension in homes they owned outright. There weren't many of them so what
    were a few free beds in public hospitals to the tax payer? The range of pharmaceuticals
    available to enhance their quality of life was so limited, it too, was affordable
    for a country with a relatively young population and thriving work force.
  • But how times have changed.
    The ageing of Australia and the fertility collapse have turned dependency
    ratios on their head.
  • The looming burden of
    aged care for the biggest generation of old people ever to hit retirement,
    the baby boomers, has encouraged governments to privatise old age - in particular
    to encourage superannuation so that people can provide for themselves and
    pay full price for their hospital expenses and those costly and ever expanding
    lists of life enhancing as well as life saving pharmaceuticals.
  • In this new order, the
    old age pension will increasingly become a bare minimum and other aged care
    government benefits will need to be strictly rationed in order to keep the
    lid on government spending.
  • With the ratio of aged
    dependents to tax payers set to double in the next thirty years- which is
    another way of saying the tax burden per tax payer will double- successive
    governments have felt they had no choice but to encourage self sufficiency
    in old age. Inter generational resentment and political polarization is the
    alternative.
  • This disparity may not
    be so dire for a woman and man sharing a retirement income- although that
    is something of a challenge in itself. We need also to remember that widows
    rarely receive the full amount of superannuation enjoyed by their contributor-
    husbands.
  • But it remains true
    that poverty in old age will increasingly be a problem for women.
  • To address the disturbing
    trend, let's look at the obstacles women face in providing for their old age.
  • Let's start with why
    women will have on average half as much money as men when they retire from
    the workforce.
  • Essentially there are
    two reasons for the lower retirement savings of women- they work less paid
    work and they are worth less in the paid work they do.
  • Superannuation is based,
    of course, on savings accumulated during a working life. But unfortunately
    it is based on a male model of working, the linear progression over 40 years
    of a fairly stable working life. That is not the career path of the vast majority
    of Australian women. 80% of Australian women reproduce. Given that we have
    always , and continue to see it as women's role to carry the major unpaid
    caring load, women's working life almost inevitably changes when they have
    babies. And almost inevitably that means that Australian women will accumulate
    insufficient funds over their working lives to support themselves comfortably
  • So if we care about
    adequately supporting Australia's women who have spent a life time of caring
    and juggling, in considering superannuation policy we need to take into account
    the lives of women, as well as those of men.
  • Perhaps we need
    to think laterally. Perhaps governments and employers could start by providing
    women with continuing Superannuation Guarantee Contributions from their employers
    while they are on maternity leave. This will give them at least continuity
    of savings despite broken periods of employment.
  • And what about women
    who are out of the paid workforce caring for others. In some countries, the
    social security system already recognises the contributions of women in caring
    for young children and the disabled, by giving age pensions credit for carers.
    Superannuation contributions, paid by the government and additional to the
    Carer Payment, could provide a means of rewarding caring services. Or perhaps,
    a system of credit bonuses could be developed to accrue additions on a pro-rata
    basis to top-up their age pension.
    So that, for example, someone
    who spent their entire working life performing necessary (but unpaid) work
    would have some additional entitlements when they receive the age pension.
  • I cannot say I am wedded
    to any of these or especially endorse them, but if we accept that women will
    spend a significant period outside paid work, then, to be consistent, we need
    to protect their retirement interests.
  • It is my contention
    that a better way of doing this would be to build workplaces that acknowledge
    and make room for workers' family responsibilities and to encourage a more
    equitable sharing within families of unpaid caring work.
  • First let's deal with
    pay equity: lower earnings mean lower levels of savings - and women earn less
    than men. Women earn 84.7c in the male dollar when the average weekly earnings
    of full time ordinary time workers are compared. We are not talking
    here about women who choose to work part time or choose not to do overtime.
    We are talking about forty hour workers, men and women. When part timers and
    casuals are included, the gap widens to 65.3 cents in the
    male dollar. (ABS 2003) These gaps are almost entirely the result of women
    needing to juggle the double load of being primary parent and carer.
  • Without denying the
    non-remunerable rewards of bearing and raising children, this pay gap is clearly
    of direct concern to the nation's women.
  • The income difference
    between women and men occurs even before women begin to bear children. Before
    the age of 30, that is, before the age when many women start having children,
    men already have 1.5 times the superannuation assets of women, reflecting
    mainly the differences in relative earnings. The disparity only widens as
    the workforce patterns of women destabilize in comparison to men.[2]
  • From the moment a woman,
    even without children, enters the workforce she experiences disadvantage as
    a result of her potential to bear children - she will earn less, be less likely
    to be considered for promotion and be more limited in her career opportunities.
  • Take for example law
    graduates. Female graduates make up 60 % of all Law graduates, but one year
    out receive $1,900 a year less in median salaries.[3]
  • According to the Graduate
    Careers Council of Australia report, the average university graduate can expect
    to receive $35,500 in their first year of employment, however males were more
    likely to occupy high-paying jobs than females. In their first year of employment,
    men earned an average of $37,000 a year while women earned $35,000.
  • Research in the United
    Kingdom found "[t]he annual salary of male graduates aged 20-24 is 15% higher
    than the annual salary of female graduates in the same age group. ... a gap
    exists even when women and men have studied the same subject, achieved the
    same class of degree, work in the same occupations or the same industries."[4]
  • But you can't explain
    much of the gender pay gap by worrying about earnings differences between
    men and women lawyers. There just aren't enough of them to make a big difference.
  • Women's employment is
    concentrated in the lower paid sectors of the workforce in occupations such
    as cleaning, teaching, hospitality, retail and nursing.
  • In these sectors it
    is arguable that the work itself is under-valued. Teaching is so badly paid
    men won't do it and nursing has been underpaid for so long our nursing graduates
    are now easy pickings for overseas hospitals.
  • Fixing the gender pay
    gap by addressing the value of female-dominated occupations will go some way
    towards addressing the super gap between men and women.
  • But undoubtedly the
    greatest contributor to the lower retirement savings of women is the amount
    of paid work women do.
  • On average women are
    currently in the workforce for a full time equivalent of 20 years, while men
    work for 38 years.[5] Studies predict that even
    with an increase in the labor force participation rate of women over the next
    30 years, women's working lives will only average 28 years by 2030.
  • Again, these shorter
    working lives are about having children. It is estimated that women forgo
    up to as much as $239,000 in lifetime earnings as a result of leaving the
    workforce to bear and raise children.
  • It would be very sad
    indeed if women, the centre-pieces of our families, ended up living in poverty
    in their retirement because they put their family caring responsibilities
    first. If for no other reason, women must be encouraged to continue working
    for as long as possible.
  • And if international
    comparisons are anything to go by, this is not an unreasonable ask.
  • The Labor Force participation
    rate of women in Australia is 55.8% , lower than the OECD average. What's
    more, women in Australia who do paid work are much more likely to participate
    in casual or part time work- almost half of all women in paid work in Australia
    work part time or casually.
  • This in itself is not
    necessarily a bad thing but these positions are likely to be less secure,
    less well paid and tend to be unstable and short term.
  • For these women superannuation
    contributions are particularly at risk of non-compliance by employers
  • Subsequently many women
    are not aware of where their super is or whether it has even been paid.
  • Some women, who are
    paid less than $450 per month are not entitled to employer superannuation
    contributions. Women who earn more than $450 but who work for several different
    employers in which each job may not reach the $450 threshold, will also not
    acquire any superannuation contributions
  • Australia's lack of
    family-friendly working conditions is again one of the most significant factors
    in the under-employment of women, of gender inequality in our workforce and
    thus of inequality of superannuation savings
  • You can't reform women's
    saving without reforming workplace practices. Superannuation is essentially
    a workplace issue rather than one of financial management.
  • Work requirements that
    prevent or limit the ability of people with family and caring responsibilities
    to participate in paid work have a disproportionate effect on women. Family
    friendly employment provisions can assist in addressing these barriers and
    hence in achieving genuine equality of opportunity for women and men.
  • The best way to address
    women's economic disadvantage is through workplace reforms - by encouraging
    and assisting women to stay longer in the paid workforce; by ensuring that
    women are paid equitably; given access to career and training development
    despite broken patterns of paid work and are given the opportunity to progress
    in their respective employment and thus increase workplace retention.
  • International comparisons
    reveal a low level of workforce involvement among Australian mothers. Of Australian
    women with two or more children, only 43% are in the workforce, compared with
    82% in Sweden and 62% in the UK.[6]
  • Perhaps women would
    do more paid work more if our work places made it easier for them to work
    and, significantly, to share caring responsibilities, with partners who could
    be encouraged to take a greater share of care.
  • Reforming the sharing
    of house work and child chare is proving even more intractable than reforming
    work places. The recent HILDA (Household Income and Labour Dynamics Australia)
    survey found that 60% of women in full time work do more than 12 hours of
    housework each week. Only 11% of full time male workers do so. The survey
    established that women were more frustrated by the difficulties they had meeting
    their parenting responsibilities, and that many women found motherhood more
    a burden than a joy. If we are serious about greater workforce engagement
    for women, we clearly have to do some hard thinking about how we can help
    them meet their onerous housekeeping and child care responsibilities at home.
  • Family responsibilities
    are not divided equally among men and women: women do 90% of childcare tasks
    and 70% of all family work. Only 15% of fathers are highly participative in
    family work.[7]
  • But we still have a
    long way to go in the work place. The adoption of so called 'family-friendly'
    policies needs to be more widespread. Flexible working hours; part time work;
    job sharing; home based work; career breaks; flexible carer leave, access
    to flexible child care, paid maternity and paternity leave are all on the
    list of must haves. It means men also not being discriminated against if they
    choose to use family friendly conditions and instead being encouraged, through
    corporate leadership, to give their families the time they crave.
  • We need to address people's
    take up of existing family friendly provisions. We need to make sure that
    people are aware of their existing employment rights and are willing and able
    to access them.
  • For example, in my consultations
    on paid maternity leave, it was clear that some women did not know, did not
    insist upon or were encouraged not to access their right to return to work
    after unpaid maternity leave. Or they left work rather than experiencing the
    "guilt" of inconveniencing their employer.
  • Currently only 31 per
    cent of women have employer provided paid maternity leave entitlements. These
    are overwhelmingly either professional and managerial, or in the public sector.
  • Paid Maternity Leave
    is almost unheard of for shop assistants and waitresses.
  • We need to make sure
    that entitlements and family friendly policies are adopted nationwide, across
    all industries and positions. It means they are more likely to remain in paid
    work and enables all mothers and fathers, whatever their work status, to be
    able to contribute to their own old age.
  • We must also assist
    women who are out of the paid workforce on maternity leave or shouldering
    continuing responsibilities for children and grandchildren and caring for
    the sick and the elderly.
  • This is a much greater
    challenge for governments but there are clear equity reasons for doing so.
  • There are additional
    national interest concerns here which go well beyond superannuation but which
    are served by the same family-friendly remedies.
  • Family-friendly work
    conditions nationwide not only enables more mothers to enter and remain within
    the paid workforce, they also effectively increase the size of the prime age
    workforce. In this century of the dragons, where world economics will be dominated
    by the huge workforces of India and China (between them predicted to have
    3 billion people by the middle of the century) increasing Australia's total
    work effort- and our economic output will be especially important to Australia's
    economic survival. Australia's declining fertility rate and rising ratios
    of dependents to tax payers makes this a crucial economic issue, to say nothing
    of its importance to individual women.
  • Overall, Australia
    suffers from a lower rate of work force participation than comparable western
    countries. The low female work rate undoubtedly contributes to this.
  • This is not just the
    result of a low participation rate for mothers with children under six, but
    an even lower participation rate in the 55 plus age group.
  • The introduction of
    family friendly policies, if the experience of other western countries is
    anything to go by, should assist an increase in female workforce participation.
    This is not only good for families and for the country, it means employers
    save the costs of staff turnover. Costs which rise with the experience and
    skill of the staff involved. Skills retention, lower recruitment costs and
    diversity are all improved by enabling women to continue to both work and
    have families.
  • An increase in the participation
    rate makes it a win win - better for families and better for Australia's prosperity.
  • And better for women's
    retirement savings.
  • But perhaps we should
    start any policy thinking by acknowledging that life for Australian women
    is not going to change quickly. As the figures demonstrate, even by 2030,
    women on average will only be working 28 full time years, compared with men's
    38 years. Should we do more to fill the gap- and in a sense, reward those
    so called lost years of motherhood and caring.
  • Educating women of all
    ages about the importance of retirement savings is a must. There is a need
    to create an understanding and appreciation of the importance of savings that
    can extend to financial planning and investment. Which I'm sure I don't need
    to tell any of you here. I'm not saying it isn't very difficult either- women
    of 25 don't think they'll ever have a wrinkle, let alone retire!
  • Increasing the role
    of women in the governance of superannuation funds is essential. We need to
    see women joining men in the leadership of superannuation funds to ensure
    the life stories of women are accounted for in superannuation products and
    policy.
  • It is true that these
    same work-family policy prescriptions apply to almost any issue of gender
    inequality you care to name. But there is something so especially sad about
    poor old ladies (who have worked hard all their lives) living on tinned corned
    beef and sliced white bread, something so especially unfair about old ladies
    waiting for years on public hospital waiting lists to have quality of life
    surgery because they cannot afford to pay for it, something so especially
    wrong with a country that has taken all this female caring for granted and
    made it so difficult for them to contribute to their own economic security;
    that this issue of women, savings and super, is one Australia cannot turn
    its back upon.

1. " ... there
are 106,000 poor single women over 65 as compared with 40,000 men in this group
in 2000" Senate Community Affairs References Committee A Hand up not a hand
out: Renewing the fight against poverty: Report on poverty and financial hardship,
Commonwealth of Australia 2004, p211.

2. C Brown- Conference Paper- Retirement Income Modeling Task
Force- Joint project Treasury , Dept Finance and Dept Social Security, 1997

3. www.gradsonline.edu.au:-
2003 Graduate Destination Survey of graduates who completed their courses in
2002.

4. United Kingdom Equal Opportunity Commission 15% off: Why
are women workers still going cheap? http://www.eoc.org.uk/cseng/policyandcampaigns/studentpack.asp.


5. 1999 OECD Economic Survey of Australia of Australia by ASFA
2001

6. Christina Lee, 'Australian women facing the future: Is the
Intergenerational Report gender-neutral?' An Academy of the Social Sciences
in Australia sponsored workshop held in Brisbane 1-2 July 2004, Policy e-paper
series (www.assa.edu.au/policy/papers/3004/intergen.htm).


7. These conclusions are reached in an overview of various studies
into the division of family responsibilities by Lyndy Bowman and Graeme Russell
Work and Family: Current thinking, research and practice, Macquarie Research
Limited Sydney 2000, 16.

Last
updated 11 November 2004.