Docstoc

Women and superannuation Women and superannuation

Document Sample
Women and superannuation Women and superannuation Powered By Docstoc
					Women and superannuation Women and superannuation
2008 Annual Premier‟s Women‟s Summit
women & money

Women have less superannuation

The figures for superannuation saving show that generally, women accumulate
significantly less than men. The Association of Superannuation Funds of
Australia Limited found that:

• Average balances achieved in 2006 were $35,520 for women and $69,050
for men.
• Average retirement payouts in 2006 were $63,000 for women and $136,000
for men.
• The amount of superannuation needed to support a comfortable lifestyle
in retirement is around $500,000. $200,000 is sufficient to finance at
least a modest lifestyle in retirement.
• Women hold about 34 per cent of superannuation assets, compared
to 66 per cent for men. However, the share held by women is up markedly from the
30 per cent held in 2004.
• The projections for coming decades show that women‟s retirement income
will remain less than men. For example, Investment and Financial
Services Association‟s projections for members (in 2007 dollars) estimate
that the average retirement balance for its women members in 2022 will be
$149,303, in contrast with $216,207 for men.

Further, as women, on average, live longer than men and contribute less
superannuation over a lifetime, older women are more likely to rely on a
government pension. In 2003 older women comprised 60.8 per cent of
age pension recipients and most were dependent upon government pensions
for most of their income. Around 55 per cent of women in their sixties have no
superannuation.

WHY?

Lower earnings

Women, on average, earn less than men, which limits their capacity to put money
toward superannuation.

• In 2006 women had a median income of between $250 and $399 a week,
while the median income of men was higher, at $600–$799.
• Women have lower participation rates, are overrepresented in part-time work
and in low-paid sectors, and tend to have extended periods of time out of
the workforce due to maternity leave and caring duties.
• In 2005, 68 per cent of Australian women aged 15–64 years were in the
labour force, in comparison to 83 per cent of Australian men in the same age
range.

Part-time work
Over the last four decades, women‟s participation in paid work has increased.
In 1979, 36 per cent of women were employed, compared to 45 per cent
in 2004.6 The bulk of this growth can be attributed to women‟s increased
employment in part-time work.

• Women make up approximately 70 per cent of the part-time labour force.
Of the full-time labour force, women make up around 35 per cent.7
Women, on average, earn less than men, which limits their capacity to put
money toward superannuation.
Lower-paid professions

Women experience continuing segregation in “feminised” occupations such as
childcare and industries such as retail, with lower rates of remuneration, than in
industries where men predominate.

Maternity leave and its impacts on superannuation

A high proportion of working women will at some point in their lives take time off to
care for their children.

• In 2005, 74 per cent of working mothers took leave or time away from their job for
the birth of their child.

• A 30-year-old female with an annual salary of $50,000 taking a career break of
six years could miss out on as much as $77,000 in retirement savings by age 65.10
Lower levels of understanding about superannuation.

While both men and women have low levels of understanding about superannuation,
fewer women have any extensive knowledge about superannuation and the
importance of saving for retirement. Among women, there is

• A general lack of awareness around co-contribution and taxation relating to
superannuation.
• A general lack of interest in effective consolidation of superannuation (many
women have two or more super accounts and many have never made a voluntary
contribution).11
Further, 28 per cent of female participants in a Citibank survey stated that they had no
idea how much they would need to fund a comfortable retirement.12

Conclusions

Due to interrupted work life, women need to make contributions to their super at
more than twice the level of men in order to achieve the same level of retirement
comfort.13

And unsurprisingly, research by the Financial Literacy Foundation found that fewer
women than men are confident that employer-funded superannuation will be
sufficient to cover their retirement needs (12.3 per cent as
opposed to 16.1 per cent).14 Women are also more worried than men about having to
rely on their partner for financial support

The current legislation relating to superannuation includes a number of ways
that women (and men) can voluntarily boost their superannuation. These include:

• superannuation contributions splitting;
• the superannuation spouse tax offset; and
• the superannuation co-contribution.
In particular the Australian Government‟s superannuation co-contribution has assisted
many women to boost their superannuation, with more women than men taking
advantage of the scheme.

There are a number of resources tailored for women which provide information about
superannuation. They include:

• Women and superannuation - taking control of your future resource from the
Australian Taxation Office, which can be downloaded from www.ato.gov.au
• Australian Government‟s Financial Literacy Foundation‟s information sheet,
Get to know your super15 tailored for women, which can be downloaded from
www.understandingmoney.gov.au

1 The Association of Superannuation Funds of Australia 2008
<http://www.superannuation.asn.au/mr080211/default.aspx>
2 IFSA Fact Sheet „Why starting early makes Super sense‟, 3 April 2008
3 Olsberg, Diana 2005 „Women, Superannuation and Retirement:


Grim Prospects Despite Policy Changes‟, Just Policy, Issue 35, pp. 31-38.
4 Clare, Ross 2008 „Retirement Savings Update‟, Association of Superannuation
Funds of Australia
5 ABS Census, Population and Housing 2006
6 ABS Australian Social Trends, 2006, Trends in Women‟s Employment
7 ABS, Labour Force Australia, June 2008
8 Advancing Pay Equity – Their future Depends on it, report by The Victorian Pay
Equity Working Party to the Minister for

Industrial Relations, February 2005

<http://www.business.vic.gov.au/busvicwr/_assets/main/lib60047/85_pay-equity-
final-4-3-2005.pdf>
9 ABS Census, Pregnancy and Employment Transitions, Australia, November 2005
10 Australian Institute if Superannuation Trustees Media Release, „Seven Steps for a
Super New Year‟, 19 December 2007
11 Security4Women, Women, Saving and Superannuation. S4W Survey findings and
summary, July 2005
12 Citibank Media Release, „Time for women to act says Citibank‟, 13 November
2007
13 Australian Institute of Superannuation Trustees Media Release, „Seven Steps for a
Super New Year‟, 19 December 2007
14 Financial Literacy: Australians Understanding Money, 2007

15
http://www.understandingmoney.gov.au/content/consumer/women/


women
& money
month$
Household budgetingand expenditure

Women‟s financial identity has historically been tied to the home and they continue
to spend their money on their home and family. Women are confident in managing
everyday expenses like budgeting, saving, dealing with credit and managing
debt.16

A Wizard Home Loans study found that women are largely responsible for
financial decision- making in the home, with 94 per cent of women managing and
making decisions regarding household budgeting and expenditure.17

The 2006 HILDA18 survey found that:

• 34.2 per cent of the women surveyed always make the household decisions
regarding day to day spending and paying bills, compared with 21.8 per
cent of men.
• While the largest proportion of male and female respondents (around half)
said that they shared the responsibility for making decisions regarding
large household purchases, the next highest proportion (20.4 per cent) of women said
they were always the main decision- maker, as opposed to
19.5 per cent of men.
These figures indicate that women have a greater degree of financial control
over household budgeting, and are more confident managing money in an
immediate context.

Women and money management
Dealing with debt

Women have lower average debt levels than men, apply for less credit, are more
likely to repay their bills and are less inclined to make credit enquiries.

Young women are also less likely to default than young men, making up 21.3
per cent of total defaults compared with 23.5 per cent of young men.19
• Generation Y women are more likely to have credit card debt than any other
2008 Annual Premier‟s Women‟s Summit

women
& money
form of debt.20

• Almost a quarter of Generation Y households have a HECS debt –
not surprisingly the largest for any of the generations.21
• Women are less likely than men to feel comfortable with their level of debt.22
Transmitted debt
Research suggests that women are particularly vulnerable to “transmitted
debt.” In the 1990s banks widely engaged in the practice of encouraging
women to act as guarantors for the men in their family, which meant that in the event
of divorce, death or estrangement, women could inherit that debt.23
Women are much more confident than men in managing everyday expenses like
budgeting, saving, dealing with credit and managing debt.
Divorce and separation causes a drop in income

Women still make up the majority of home-based parents and as such are more
dependent on their partner‟s income. This can mean that if a relationship dissolves,
women are often left with fewer financial resources, limited earning capacity,
and with diminished career prospects, especially if they are trying to re-enter the
workforce after a long period.

A 2005 AMP.NATSEM report on the economic effects of divorce found that
while women tend to be asset rich immediately after divorce, they are more
vulnerable than men to loss of disposable income. This is because the average man
tends to live without children following separation.24

• Women who separate from a relationship experience an average
drop in household income of 42 per cent, whereas men experience a
drop of 8.2 per cent.25 Single mothers are moredisadvantaged

Single women, particularly sole parents, are especially financially vulnerable. Many
are dependent upon government pensions for their main source of income.

• In 2003-04, government pensions and allowances were the principal source
of income for 61 per cent of one-parent families.26
• In 2006, 87 per cent of one-parent families with children under 15 years
were headed by mothers.27
• Single parents and single women occupied the poorest quartile of
households by wealth holdings.28
• Single mothers are least likely to hold investments.29
WIRE – Women‟s Information has a range of information sheets on women
and money, including, Property and Separation and Women and Debt,
which can be download from WIRE‟s website www.wire.org.au. The Australian
Government‟s Financial Literacy Foundation has recently developed
fact sheets tailored for women, which can be downloaded from the Foundation‟s
website www.understandingmoney.gov.au. The fact sheets cover a range of topics
including:

• Money and the single woman
• Starting out
• Managing money in your relationship.
16
Fear, Josh 2008 Choice Overload, the Australia Institute; Financial Literacy
Foundation, Women Understanding Money, 2008; Singh,
Supriyah and Anuja Cabraal, 2006 Women, Money and the Bank, paper presented to
the Financial Literacy, Banking and Identity
Conference, RMIT, University of Melbourne

17
Wizard Home Loans, Her Home Ownership: emerging trends in women‟s home
ownership, March 2006
18
Household Income and Labour Dynamics in Australia Survey 2006

19
Dun and Bradstreet, „Australia‟s Youth Facing Debt Stress‟, 15 May 2008; Veda
Advantage, „Gender Gap in Credit Puts Women on
Top‟, 7 August 2007

20
AMP.NATSEM, „Generation whY?‟ Income and Wealth Report, issue 17, July 2007

21
Ibid.

22
Ibid.

23
Singh, Supriyah and Anuja Cabraal, 2006 Women, Money and the Bank, paper
presented to the Financial Literacy, Banking and

Identity Conference, RMIT, University of Melbourne

24
Connections Online, „Two Incomes to One: Taking control after divorce‟,
August/September 2005

25
Weston, Ruth and Bruce Smyth 2000 Family Matters, no. 55, Autumn, Australian
Institute of Family Studies

26
ABS, Australian Social Trends 2007

27
Ibid.

28
AMP.NATSEM, „Baby Boomers Doing it for Themselves‟, Income and Wealth
Report, issue 16, March 2007

29
ASIC Australian Investors: at a glance, April 2008


women
& money
month$
Investing

In comparison to men, women on average, lack investment knowledge. According
to BT Investment research, women are significantly less interested than men in
learning more about investments and demonstrate a lack of engagement with financial
issues.30

However, the Financial Literacy Foundation‟s study found that 68 per
cent of women surveyed were interested in learning more about investing money
(still a lower figure in comparison to men, at 71 per cent).31

•
A Citibank survey revealed that 20 per cent of women said they would know
exactly what to do if they were given six months‟ worth of salary compared
with 32 per cent of men.32 Men are more likely to have investments
like shares or bonds.

•
In 1997, just 18 per cent of women owned shares directly. However, in
2007, 37 per cent of women owned shares directly, only marginally behind
men at 40 per cent. This marks a significant long term increase in share
market investment among women.33 Women investors are more likely to
have low- value portfolios, but be better investors:

• Women are more likely to have investment portfolios valued below
$20,000 and much less likely to have portfolios over $500,000 or more.
• Women investors tend to have managed investments, rather than managing them
themselves, and diversified portfolios.34

2008 Annual Premier‟s Women‟s Summit
women
& money
Women are more likely to invest in property and are, importantly, more
likely to own their own home.


Wealth and investing
• However, in comparison to men, women are more likely to make fewer investment
mistakes, such as allocating too much to a single investment or acting on
unsubstantiated “hot tips”.35
Women prefer to invest in property

Women are more likely to invest in property and are more likely to own their
own home.36

• Wizard Home Loans‟ Her Home Ownership: Emerging Trends in
Women‟s Home Ownership found that 70 per cent of women preferred
property investments to any other form, mainly due to a greater
understanding of the market and a perception of stability and relative
safety.37
•
In comparison to NZ, UK and Canada, Australian women are far more likely to
use property investment as a means of creating financial independence, and
represented the highest proportion of women who purchased a property by
themselves.38
Younger women are saving more, earlier

Younger women are showing more of an interest in financial issues and
demonstrate an awareness of the need to plan for retirement and to start saving
early.

• Comparatively, over time, there has been a rise in female earnings.
• Women are spending less time out of the workforce after having a child, and
more women are returning to full- time, rather than part-time work.39
• The proportion of women employed as professionals has risen dramatically.
27 per cent of employed Generation Y women are professionals or associate
professionals, compared with only 20 per cent of employed Generation Y
men.40
• Generation Y women are significantly more likely than men to hold a
bachelor‟s degree or a diploma.41
These trends indicate that there is a growing number of women who have the
capacity to start saving more and earlier.

Indigenous women have alower earning capacity
Generally, in Australia Indigenous men and women have relatively lower levels
of employment and education which limits their ability to secure financial
independence.

• Unemployment for Indigenous Australians is more than three times
the non-Indigenous rate.
• In 2006 the median gross individual income for Indigenous people was 59
per cent of the median income of non-Indigenous people.
• Employed Indigenous women report a lower median income than Indigenous
men (84 per cent).42
30 BT Financial Group, „Women and Money‟, BT Quarterly, Vol. 1, October 2005
31 Financial Literacy Foundation, Women Understanding Money, 2008
32 Citibank, „Results and Insights from the Citi Fin-Q Survey‟, March 2008
33 Field, Nicola, „Girl Power: are women better investors?‟ Money Magazine,
November 2007
34 WIRE, Women‟s Financial Literacy Research Report, August 2007
35 Field, Nicola, „Girl Power: are women better investors?‟ Money Magazine,
November 2007
36 Citibank, „Results and Insights from the Citi Fin-Q Survey‟, March 2008;
Financial Literacy Foundation,

Women Understanding Money, 2008

37
Wizard Home Loans, Her Home Ownership: emerging trends in women‟s home
ownership, March 2006

38
Property Investors Association of Australia, „Australian women lead the global
property charge‟, March 30, 2007
39
IFSA Fact Sheet „Why starting early makes Super sense‟, 3 April 2008

40
AMP.NATSEM, „Generation whY?‟ Income and Wealth Report, issue 17, July 2007

41
bid.

42
ABS, Population Characteristics, Aboriginal and Torres Strait Islander Australians,
2006


women
& money
month$
Women‟s confidence in financial decision making
2008 Annual Premier‟s Women‟s Summit
women & money
Women‟s confidence in financial decision making
2008 Annual Premier‟s Women‟s Summit
women
& money

Attitudes to money

Women are often required to take control over financial matters d uring times of
profound change in their lives, like death of a partner or divorce.

At the time when they need to be at their most astute and financially and mentally
able, they are dealing with extremely stressful issues, often involving the welfare
of family or children.43

Confidence about financial decision making

Research by the Financial Literacy Foundation found relatively lower
confidence levels among women regarding long term financial decision-
making. A significant number of women also felt that they were „hopeless‟ with
money and „uninformed‟.

• 52 per cent of women say that dealing with money is stressful and
overwhelming.
• 42 per cent of women say that thinking about their long-term financial future
makes them uncomfortable.
• 23 per cent of women believe that nothing they do will make a big
difference to their financial situation.44 Many women do not access basic
information related to their own financial situation and are unable to say how much
superannuation they contribute. Women‟s lack of confidence reflects the gaps in
their financial knowledge.45

Gaining financial advice

Women prefer to rely on assistance from people they know and trust in looking for
financial help.

• Women are three times more likely than men to consult their partner
before making superannuation decisions.46
• Women feel more comfortable doing business with a „female-friendly‟ fund.
• Women favour people as information sources, rather than media or
advertising.47
• 60 per cent of women surveyed by the Financial Literacy Foundation say they
have used a bank for financial advice, compared with 53 per cent of men.48
• 82 per cent of women surveyed by
WIRE - Women‟s Information do not trust financial planners because
they believe they are biased and sell products for which they receive
commissions.49

Women prefer to rely on assistance from people they know and trust
in looking for financial help.
The problem of too much choice

Today, for both men and women, the array of choices available in financial decision-
making can be overwhelming, especially with the recent introduction of Super
Choice.50 For people who feel uninformed or lack understanding, this often means
that they end up making no choice at all.51

• According to a HESTA Super Fund survey conducted before the Super
Choice legislation came into effect, 64 per cent of women felt that they did not
know enough about superannuation to choose a fund.
• Most women were unaware of the choice of fund legislation, lacked
confidence about making the right choice of fund and were more worried
than men about their superannuation.
• While 64 per cent of women felt they did not know enough about
superannuation to choose a fund, the figure was as high as 80 per cent for
women aged 15-29 years.
Marginalised women have greater difficulty accessing services and information

• Marginalised women are mistrustful of banks to give reliable financial advice
due to the perception that they are self- interested.52
• Indigenous women have more difficulty accessing services and information
due to their higher concentration in geographically isolated areas, and
lower employment rates compared to non-Indigenous women.53
• For culturally and linguistically diverse women, cultural attitudes to money
and the lack of financial information available in their first language are
significant barriers to accessing financial institutions and government
support agencies.54

The Financial Literacy Foundation fact sheets for women, which can
be downloaded from its website www.understandingmoney.gov.au, aim
to assist women improve their financial knowledge and confidence in financial
decision making. Fact sheets include:

• Your relationship with money
• How to get good advice about money

What does it all mean? Understanding
the language of money
43
WIRE, Women‟s Financial Literacy Research Report, August 2007

44
Financial Literacy Foundation, Financial Literacy: Australians Understanding Money,
2007

45
BT Financial Group, „Women and Money‟, BT Quarterly, Vol. 1, October 2005

46
Thomson, Tax and Accounting Insight, Issue 94, 28 January 2005

47
WIRE, Women‟s Financial Literacy Research Report, August 2007; BT Financial
Group, „Women and Money‟,
BT Quarterly, Vol. 1, October 2005

48
Financial Literacy Foundation, Women Understanding Money, 2008

49
WIRE, Women‟s Financial Literacy Research Report, August 2007

50
www.superchoice.gov.au

51
Fear, Josh 2008 Choice Overload, the Australia Institute

52
Office for Women, 2007, „Financial Literacy Among Marginalised Women‟

53
Ibid.

54
Ibid.


women
& money
month$

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:7
posted:3/20/2011
language:English
pages:16