Ask Noel: How can women’s super balances be improved?

The research also shows that women tend to be more risk averse than men are. The cost of this in later life can be huge.
The research also shows that women tend to be more risk averse than men are. The cost of this in later life can be huge.

Last month I had the pleasure of attending a seminar on Superannuation and Women run by Griffith University. It was so good to attend an information sharing session where everybody kept to the facts and there were no inferences about gender bias. There is a wealth of research and it all points in the same direction.

The harsh reality is that most women retire with much less superannuation than men do, which makes it particularly difficult for single women and widows. And this is exacerbated by the fact that, on average, women live almost five years longer than men.

The reasons for the disparity in super are obvious: there is a 16% pay gap between males and females. Males tend to dominate in higher paid managerial positions, females often take time off from work to raise children, and 75% of part-time workers are female. Furthermore, there is often no employer superannuation paid when a worker is on maternity leave.

Once money is inside superannuation, women still tend to earn less. Why? Women tend to be less interested in superannuation than men, and because they often have a number of low-paying jobs in their working life, they accumulate multiple superannuation accounts because amalgamating them is just too difficult. I can vouch for that – my daughter has four small superannuation accounts and I’ve been trying for three years to get her to consolidate them. But the paperwork always gets in the way.

The research also shows that women tend to be more risk averse than men are. As a result, they tend to keep their superannuation in more conservative options from the time they start work. The cost of this in later life can be huge.

CASE STUDY Two people start work at age 20 on $35,000 a year. Let’s assume their salary grows at 4% per annum and employer contributions remain at 9.5%. The first person is extremely conservative, so their fund earns only 4% per annum. At age 65 their superannuation balance is $750,000. The second person adopts a more growth-orientated asset allocation and as a result their fund earns 8% per annum. At age 65 their superannuation is worth $2 million.

Education is a critical factor in improving the gap in superannuation returns, and it was great to hear representatives from funds Unisuper and Qsuper telling us what they are doing in this area. A major focus was on offering financial literacy seminars, as well as nudging people towards the ASIC Moneysmart website, which is a great source of information.

So what can be done? A starting point would be to make “high growth” the default option for everybody under, say, 50. This would boost their superannuation in the long term and get them used to more growth-orientated assets along the way.

Fortunately, some action is being taken at government level. Last month's budget flagged changes to require all inactive superannuation accounts with balances below $6,000 to be transferred to the ATO. The ATO will then use data matching to proactively reunite these inactive accounts with a member’s active account, where possible.

From last July everybody has been able to make tax-deductible contributions to super, even if their employer is contributing for them.  Best of all, legislation is in place to allow catch-up contributions, enabling women to make additional contributions to compensate for time spent out of the workforce.

These three government initiatives will certainly help reduce the gap between men and women in regards to superannuation.

Of course there is still much to do, and improving financial literacy for all Australians continues to be one of the greatest challenges facing us. But the better we understand the problem, the better chance we have of solving it.

  • Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. Email him at, Visit his website: