New figures show that the disparity in retirement savings between men and women has widened from the previous year.
According to Financy Women’s Index Report covering December 2018 to March 2019, the gap in lifetime balances (those aged between 50 to 65 years) between AustralianSuper’s male and female membership had widened to 32 per cent in the December quarter.
By comparison, this is wider than the 21 per cent gap in June 2018.
AustralianSuper said that of its 2.2 million members, the average woman retiring today would have $82,374 in super retirement savings, compared with $120,818 for the average man.
The report said the gender gap in superannuation remains wide due to women spending more time out of the full-time workforce caring for children and loved ones, without superannuation payments, and earning less than men on average.
As for suggestions to improve the gender pay gap in super, the report noted a new measure that kicked in from July 2018, allowing for unused concessional super contributions to be accumulated over five years provided the individual’s total super balance is less than $500,000.
Further, it added that while the annual limit on concessional contributions is $25,000, individuals can make use of up to five years of previously unused contributions.
AMP Financial Planning adviser Dianne Charman said the measure “could help women returning to the workforce after taking time off to have children, giving them the ability to ‘catch up’ on super by making higher concessional contributions without breaching the annual cap”.
“Whether your retirement is close or quite a few decades ahead of you, everything you do today to be proactive about improving your financial position will mean you’ll forever thank your younger self,” she said.
The report also highlighted 2018 as the first calendar year that women can use the extended ‘spouse contribution tax offset’.
Under the offset, the higher earning partner in a relationship is allowed to make tax reduced super contributions on behalf of their lower earning partner, as long as the lower earner has an income below $40,000.
Further, the full tax offset will now apply up to an income of $37,000, an increase from the previous $10,800.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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