The gap between men's and women's retirement incomes is a grave and pressing issue that has remained largely invisible even as two federal inquiries investigate the country's tax and pension systems, the Sex Discrimination Commissioner says.
Elizabeth Broderick will deliver a stinging attack tonight on the design of the superannuation system that delivers its major benefits to those able to complete 35 years of continuous full-time paid work – overwhelmingly men.
She will tell an audience at the Sydney Institute that many women are ending up in poverty in retirement as a result of gender inequality at every point in their life cycle – and because they do society's caring work.
“Women should not end up in poverty for choosing to care. Caring is a contribution that benefits everyone,” she says. She will issue a “call to action” to reform the retirement income system to make it “better reflect the reality of a woman's life cycle” and to reward unpaid caring work, perhaps through a national social insurance scheme, and an expanded co-contribution scheme.
In 2006, women's superannuation balances and payouts were about half those of men, and in 2004 half of all women aged 45-49 had a tiny $8000 or less in their superannuation accounts compared to $31,000 for men.
Despite the attention on retirement incomes over the past year through the Henry tax review and the Harmer pension review, the gender gap issue had “remained largely invisible”, Ms Broderick says.
The “shocking reality” was that women were more likely to accumulate poverty during their lives than wealth because of the design of the super system and women's cumulative experiences of inequality that resulted in less time in the workforce and lower lifetime earnings.
Ms Broderick says the path to retirement inequality begins when women enter areas of study such as health and education courses – where they outnumber men three to one – that are linked to lower-earning industries. “I'm not at all suggesting that women choosing to work in these areas are making bad decisions,” she says in her speech.
“The problem is not the women's decisions ... it is the undervaluation of these kinds of work and the long-term financial penalty that follows.” In the workforce, women then face pay inequity, with the disparity between men and women's ordinary full-time earnings almost 17 per cent.
When pregnant, women are vulnerable in the workforce to demotions, missing out on promotions, redundancies and bullying; and when they return to work they often face the same problems, Ms Broderick says.
But the fundamental barrier to equal retirement income is the struggle to balance paid work and caring for children. She presents the hypothetical case of Leena, who works in aged care, stays at home when she has young children, then works part time, and changes to casual work to help her child with a disability.
Fast forward 15 years, and she has separated, has little retirement savings and is solely reliant on the age pension. “There is not a single point where you could say that Leena made a bad or wrong decision ... Yet, if we look at each point in her life cycle she has paid a financial penalty, leaving her vulnerable to poverty in retirement.”
The number of divorced and separated women of retirement age is expected to rise in the next two decades and these women are at greater risk of poverty. Currently divorced women have the lowest levels of superannuation and assets compared to divorced men and married couples.
