Super system leaves women poorer in retirement
This can stop but why hasn’t the government actioned its promise? Here’s why older women should be free to build their retirement savings.
A new report by superannuation industry group, the Super Members Council, highlights the extent to which women are disadvantaged by a system that is skewed against people who take time out from work and those who have bosses who don’t pay super or pay it infrequently.
Currently, super contributions must be paid quarterly, although employers can – and many do – choose to do so more frequently. Paying super more often helps workers by generating investment returns sooner, thus building their retirement nest egg quicker.
The report reveals the impact of “unpaid super”, especially on young, lower paid workers – including women, who are often in lower paid work. Some women in this situation are not paid their full super entitlement on time or are not paid their super at all. This can happen either unintentionally or deliberately.
The report estimates that unpaid super affects one in four working women in Australia, costing each affected working woman an average of $1,300 in super contributions each year.
In 2022-23, women missed out on a total of $1.9 billion in super contributions. Over the past 10 years, this figure amounts to $15.5 billion – money that rightfully belongs to the women who earned it.
By the time they retire, a typical woman with unpaid super can miss out on more than $26,000 in super savings by retirement, due to the missing contributions and the lost compound investment returns on those contributions.
Half of the women affected by unpaid super are community and personal service workers, professionals, and clerical and administrative workers. This includes childcare workers, aged care workers, and nurses.
About half of women in their 20s and 30s earning less than $25,000 were not paid some or all of the super they earned.
Gender gap super
Underpaid super is just one hurdle for working women who depend on super growth for their retirement.
Women spend more time out of the workforce than men to care for children, are more likely than men to work part-time, and earn less than men when they are working. The SMC report says super tax settings magnify these differences in lifetime savings.
Also, women receive a lower proportional tax benefit than the assets they have in the system – amplifying the external inequities coming into the super system.
So, the effects of being underpaid super are overall more acute for women, who continue to retire with 25% less super than men, despite living longer on average.
The SMC report says a key driver of unpaid super is that payments of super are misaligned with payments of wages.
“Outdated regulation, which only requires super to be paid quarterly, leads to many cases of unpaid super going undetected for a long time, or never being detected at all,” the report said.
It says aligning the payment of super with wages (payday super) will make it easier for workers to check that the amount of super listed on their payslip each payday has been correctly paid into their super fund account.
Payday super reform
The Australian Government has pledged to introduce payday super laws but despite a start date of 1 July 2026, the legislation has yet to be introduced into Parliament.
SMC says legislation wasn’t introduced in the first Parliamentary sitting fortnight this month, and that risks delays that could further hit women’s retirement savings.
SMC is calling on the government to urgently legislate payday super by introducing the laws in the next sitting fortnight to enable a smooth transition by the ATO, businesses and super funds.
The council is also pushing for more proactive compliance and stronger enforcement by the ATO – and wants to extend the Fair Entitlements Guarantee to include workers’ super after a business collapses.
How older women can build their retirement savings
There’s a national labour shortage in the care industry, including aged care. It is a sector where women have made, and continue to make, a significant contribution.
However, at a time when we need them most, the sector is losing experienced workers who are nearing retirement or are in retirement and don’t want their retirement savings penalised by working more than the hours allowed by government.
Working more hours and earning more income can lead to their earnings being taxed and Age Pension payments cut.
National Seniors Australia (NSA) is campaigning to have employment income exempted from the Age Pension income test for all pensioners, especially those working in the care economy.
The benefits include giving older people greater income and retaining more people in the workforce to address high job vacancies.
For working pensioners, it would increase both the income and savings of low-wealth pensioners, particularly women, and provide them with social and emotional benefits from ongoing workforce engagement.
For aged care, it would boost workforce participation, helping to meet growing demand for care workers.
For the economy, it would help by encouraging ongoing workforce participation, addressing shortages. Allowing pensioners to earn additional income would lead to them paying additional income tax, offsetting extra pension costs.
