Address to the Australian Institute of Superannuation Trustees and Women in Super Lunch
It is great to be here with you today.
As Minister for the Status of Women, it is my job to highlight and address the issues confronting Australian women.
Some of these issues are better known that others – for example, issues like the number of women on corporate boards receives plenty of media attention. The horrific statistics of the prevalence of domestic and sexual violence – and the efforts to address these – receive less.
But if there is another issue that we should be highlighting, that we should be mortified about and desperately seeking to resolve, then surely that issue is the number of hard working Australian women struggling at a time when they’re at their most vulnerable.
The truth is that Australian women are slipping into poverty when they are supposed to be enjoying the fruits of a lifetime of hard work. These older Australian women are now massively over-represented in our homelessness figures.
Today, I’d like to talk about the issues faced by women in relation to their super, what this means and how the Government is responding.
The truth is – this is not something that we tend to talk about.
Talking about aging is a bit awkward. Talking about money, doubly-so.
But it is something that we need to talk about. In every situation, in every location – in the workplace, in the supermarket, in our schools, to our friends, to our families, to our partners.
Because, of course, we’re not talking about a particular group of women who are vulnerable to having insufficient super.
This issue affects all women.
It could be you.
It could be me.
It could be anyone who takes a break to raise a family.
It could be anyone who needs time off to care for a sick parent or family member.
It could be anyone who has a relationship breakdown and loses their shared assets.
It is an issue that is relevant for every Australian woman.
And I think we each need to pledge to take every opportunity to make sure that women are aware of it.
Those of you here know the issues that women are facing in retirement, but because we are committed to talking about it early and often – it is worth restating.
We know that women are at greater risk of having low superannuation savings and being over-reliant on the age pension.
Women suffer disadvantage in retirement for a number of reasons.
Women are more likely to shoulder the bulk of unpaid caring work, have lower incomes, career breaks, and work part-time.
And, of course, ultimately we simply live longer than men, so our savings have to go further.
The negative impact of these factors on women’s security in retirement is clear.
Women are also more likely than men to be reliant on the age pension with women representing 70.6 per cent of all single age pensioners.
Shockingly, 60% of women are retiring with no super at all.
Of those receiving super, the ABS tells us that the current average superannuation payout for women continues to be significantly less than a man’s – approximately $198,000 for men and $112,600 for women.
Data from the ABS on retirement shows another important trend.
Women in retirement are having to go back to work to support themselves.
Now, older workers are a boon to our workplaces and our economy, and there are many reasons why remaining or returning to the workforce can be a fulfilling thing.
But, the figures tell a different story. Of the people who had returned to work after retiring, 42% of women say that they needed to return to work due to financial need.
And this financial need is not just a case of money-stress.
In fact, the evidence is that, increasingly, women are at greater risk of slipping into poverty and homelessness later in life.
I’m sure that you know women who have been disadvantaged as the result of a divorce or a personal or natural disaster.
From my perspective, these stories are being heard more and more.
And I want to talk a little about some of those stories today.
Kim, 48, has worked hard all her life in the manufacturing industry. The single Melbourne woman said it was difficult to accrue good superannuation in low-paying jobs.
Kim took time off work to care for her dad, John, when he had prostate cancer.
And then she was sick and needed more time off.
This put Kim about two years behind on her own estimation.
Kim expects to work until her mid-60s because she won’t have enough super to see her through retirement.
But she is worried that if she or her father gets sick again, then things could be much, much worse.
This is the same worry that Trish has.
Trish, at 59, is a school principal.
She plans to continue work for many more years to come — because there is not enough superannuation for a comfortable retirement.
Trish has been a teacher for 40 years and said when she first married, as with all female teachers at the time, she was forced to resign from her super fund.
Her super didn’t recover and that, coupled with having two children and a marriage breakdown, took its toll.
Trish said she will never catch up to the sort of super male teachers with equivalent years of service have.
These stories are quite common.
They are not just stories of limited super – but they are stories of financial stress and worry.
At a time when worries should be lessened and the stress of work and raising a family over – women are finding themselves worrying more, working more and doing more with less.
Of course, there is one very simple way to boost women’s super – boosting their employment participation and wages.
Australia’s participation rate of 60% for women is extremely low by international standards, with the World Economic Forum placing us 44th in the world for the labour-force participation.
Our challenge as a Government is to ensure that women are participating more and earning more – so that they can build assets for retirement.
There have been a number of important reforms that this Government has introduced in the past month, which I believe will significantly impact both women’s participation and the money they earn.
As you may know, the Clean Energy Future package includes tax reforms which will mean that workers earning less than $80,000 will keep more of the money that they earn.
Changes to the tax free threshold will benefit 3.7 million women with taxable incomes under $80,000, with most receiving a tax cut of $300 per year.
These tax reforms will be particularly significant for women who work part-time. The tax-free threshold will be more than trebled to $18,200 in 2012-13. Together with $445 of low-income tax offset, this means that women who earn up to $20,542 per year will now pay no tax – and keep everything they earn.
There will be half a million people who go from having to pay tax to paying no tax as a result of this package – and of those, three hundred thousand are women.
This is tax reform for working women – and women who want to work more.
It builds on this Government’s groundbreaking reforms to lift workforce participation for women, including the introduction of paid parental leave; new investments in childcare; returning the rights that women lost under Workchoices; expanding and improving measures to prevent sex discrimination; and new investment in the Agency responsible for promoting gender equality in the workplace
We are also equally committed to pay equity because it is just and fair that an equal day’s pay is provided for an equal day’s work.
And we know that it is critical that the very important caring and service oriented work undertaken disproportionately by women is valued and appropriately rewarded.
You will have heard last week that this Government will be committing $2 billion to ensure that workers in the social and community services sector will receive the pay increases that they do desperately need. 70% of this workforce are women.
Quite apart from our moral commitment to equal pay, there is also the strong economic argument to close the pay gap.
The 2010 NATSEM report highlighted the detrimental effects of the pay gap between men and women on the Australian economy – costing us $93 billion each year which can be equated to 8.5 per cent of GDP.
The changes to the Sex Discrimination Act, and Fair Work Act, as well as reforms to Equal Opportunity for Women in the Workplace Act represent a new way of thinking; a new direction for women and business.
What these reforms will do is ensure that flexible work practices are more widely available to both men and women.
More importantly, our reforms to the Equal Opportunity for Women in the Workplace Act and its Agency will strengthen its work with businesses to stamp out discrimination and ensure women have equal access to promotions, salary and management positions.
By improving this Act, we are implementing a more contemporary and coherent approach to economic equality between women and men.
I am proud to represent a Government that is serious about improving women’s working lives.
We are committed to removing barriers to women’s full and equal participation in the workforce.
The combination of all these improvements will ensure that as many women as possible have access to employment and conditions that are fair and equitable throughout their working age lives.
Boosting women’s participation is essential, but as a Government, we are also aware that changes need to be made to our superannuation system itself to ensure that Australians can have a comfortable retirement.
Our Government has initiated reforms to improve the retirement savings of all workers and provide better support to lower income workers and people with interrupted careers.
These reforms will go a long way to boost retirement savings for women.
At the moment, 3.6 million low-income Australians, including around 2.1 million women get no (or minimal) tax benefit from contributing to superannuation.
For women, that means that 3 out of every 8 women in the workforce do not get a tax benefit from contributing to superannuation.
From 1 July next year, this Government is making the system fairer by ensuring no tax is paid on the superannuation contributions for Australians earning up to $37,000 – instead, that the money will be directed into their superannuation.
Sixty per cent of the beneficiaries of this policy are women.
The superannuation savings of 2.1 million women earning less than $37,000 will be boosted by $550 million in 2012-13 alone.
Put simply, the government is lowering the tax burden on low-income Australians—people who go to work every day—and directing this forgone tax revenue into their superannuation accounts to help them build for the future.
The revenue from the Minerals Resources Rent Tax will go towards filling the resultant gap in tax revenue.
As a Government, we believe that this is the right way to share the benefits of the mining boom – to redress disadvantage and put women and men on equal footing in this country
Importantly, we are increasing the superannuation guarantee rate to 12 per cent by 2019-20.
Around 4.1 million women are estimated to benefit from the increase.
We will also raise the superannuation guarantee age limit from 70 to 75 providing an incentive for mature workers to remain in the workforce while boosting their retirement savings.
Because of these reforms, Treasury estimates that a 30 year old woman on average wages (around $60,000) will have an extra $108,000 in retirement saving.
If that 30 year old woman undertakes some part-time work and spends time out of the workforce, she will still have an extra $78,000 in retirement savings.
These are big changes. And changes that we are very proud of.
These are reforms that will impact every Australian – but importantly, they will assist the millions of Australian women working hard for a healthy and safe retirement.
Last, but by all means not least, the Government is also encouraging women to understand and take control of their superannuation.
71 per cent of Australian women say they are not confident that their superannuation will provide enough money to live on when they retire.
We know that women need to be more engaged with superannuation. And that they need to more fully understand that the ramifications of too little super are long lasting and can led to poverty in later life.
I am very keen to get more young women engaged with their superannuation.
I am looking forward to working with organisations like yours to increase women’s awareness of their super – and the importance of retirement savings to a good life, a happy life and a life well lived.
The Australian Government is committed to the superannuation reforms that will ensure women are able to accumulate sufficient superannuation over their lifetimes to have a happy, healthy and secure retirement.
We are also committed to building employment options for all Australians and ensuring that women in particular can flexibly and freely enter and re-enter fair and equitable workplaces, because we know that this directly benefits a woman’s capacity to accumulate superannuation.
A vital component of this is in supporting women’s occupation choices also, including within the finance and superannuation industries.
I look forward to receiving your continued support and valuable contributions that go a long way to improving women’s financial security in retirement.