Better Super outcomes for Women
The Government is set to explore changes aimed at creating a more even playing field for men and women saving for retirement, we look at what this news may mean for equality in super, and how women can take charge of their savings today.
The Government is set to explore changes aimed at creating a more even playing field for men and women saving for retirement We look at what this news may mean for equality in super, and how women can take charge of their savings today.
At present, there is a gender pay gap close to 18% between men and women, and men are reaching retirement with about twice the amount of super savings accumulated compared to what women have been able to accumulate. This disparity has prompted the Government to set up an inquiry into the financial security of women.
Meaghan Noble, Commonwealth Bank’s Executive Manager Women and Advice, explains.
“Attention to this problem is obviously broader than just superannuation, but it includes ensuring superannuation rules allow all Australians equal opportunity to save.”
One of the proposed changes to super includes greater flexibility around contributions for people with interrupted work patterns. “This means when people are in a position to play catch up, they’re less likely to bump up against limitations,” says Noble.
“The reason the proposed changes could be great news for women is that, despite the evolving nature of family roles, women remain more likely to take themselves out of paid employment to care for children, and other family members.” Noble adds that regardless of the proposed changes, there is already a range of ways for women to take more control of their super.
The first step to taking control
“The first step is simply about taking ownership and valuing your financial wellbeing. If you’re in a relationship, it makes complete sense to work towards your retirement goals as a team, but that is quite different to relinquishing your involvement Don’t underestimate your own capabilities.” Noble suggests using a Super Calculator to help see where you stand today.
Check your statements
Take a closer look at your super statements, and ask questions if there are things you don’t understand. If you’re not sure where all of your super is, you can use the Colonial First State Concierge Service team to help you find your super.
Avoid unnecessary fees
You may consider consolidating multiple funds into one in order to possibly reduce unnecessary fees. This can also help you get a clearer picture of how your super is invested and performing.
Consider adding to super
“Super is generally taxed concessionally, making it a great investment,” says Noble. But because there are a number of ways to top up, she recommends knowing the options available to you and seeking advice to ensure these and any other financial obligations you have are best balanced to you and your household.
Salary sacrifice is adding your own before-tax money to super via your employer. Together with your employer’s contributions, they’re known as concessional contributions; the sum of these can currently be up to $30,000 per annum if you’re under 49 years (up to $35,000 for those over 49) to take advantage of super’s concessional tax rate of 15%.
Personal contributions are those you add with your after-tax money for which you don’t claim a tax deduction. Provided this is only up to $180,000 per annum (or $540,000 over three years if under age 65), these contributions are tax-free.
“These may be two areas that become even more attractive if proposed changes go ahead,” adds Noble. “There are a few other options also.”
Spouse contributions are where one spouse contributes after-tax money into the super of a nonworking or low-income earning spouse, and receives a tax rebate.
Splitting contributions refers to concessional contributions that can be re-directed to a spouse’s account in subsequent financial years.
“Regardless of how far you are through your working life, it’s never too early or late to put your retirement savings on a better course. Help and advice is all around.”
Source: Colonial First State Investments Limited
i Gender Pay Gap Statisticsi, Workplace Gender Equality Agency, September 2015, www.wgea.gov.au.
ii An update on the level and distribution of retirement savingsi. ASfA Research and Resource Centre, 2014, www.superannuation.asn.au.
iii Before bringing your accounts together you should consider fees, loss of insurance cover you may hold, costs for withdrawing from your other super funds and any Investment or tas implications. Speak to yourfinancial adviserbefore making any decision to consolidate your super.
iv Plus any personal contributions for which yau have claimed a tax deduction, such as if you were self-employed.
