Your part in closing the superannuation gender gap
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Sadly, the gender pay gap continues long after you finish work and influences your security in retirement.
It's a problem I discussed in this column last week, and one that's since been a topical conversation amongst my female friends and clients. Linking pay to security in retirement is a relatively new thing, it seems, for the female psyche.
We really seem to believe that remuneration for our labour or intellect is a reflection of our self worth. Yes, it's true. Discussions about pay rises most often come from an aggrieved personal space of what we want to believe we're worth and it's an emotional equation. "Ask for what you're worth" we're told. It conjures up pictures of a small girl asking for a big girl's pair of heels.
Let's flip it on its head and move the debate to one of, "what do I need to be paid to live the life I want, now and into the future?" For the purposes of this point I'm going to focus on the future and how the gender gap disadvantages women before they've even thought about retirement.
To further the gender gap in super, I went to the MoneySmart superannuation comparison calculator to do a simple comparison. I've kept the inputs simple too, for consistency and they do not take account of rising statutory retirement ages, tax, contribution caps or other external factors.
'Sally' was up first. She's aged 20 with a retirement age of 65. She's on an impressive salary of $100,000 (generous, but a round figure for the purposes of this exercise) and her employer pays the minimum statutory superannuation guarantee of 9%. At the age of 65, she will retire on a pension of $42,806. She works for her entire career.
'Simon' was up next. He's also aged 20 and retiring at 65 but he's on a salary of $118,000 as per the current gender based wage gap of 17.5%. Simon's pension at age 65 will be $47,196. 10.25% greater than Sally's.
Yet they do the same job.
To get her pension up to $47,392, closer to Simon's, Sally has to contribute an extra $120/month from her take home (after tax) pay.
I'll leave the calculations there, but let's be clear, they don't take account of the reality that Sally will most likely work for fewer years than Simon while she raises their family. In turn this begs the question of how she can rectify her situation. Here are a few thoughts on that front which apply whether you are starting out in your career or indeed mentoring other young women to achieve.
Ask for more money, it's not about your self worth, it's about the amount you need to earn to have the life you want. Please be clear about that.
Consider topping up your employer superannuation guarantee to a higher level, subject to your contributions caps. Go to www.moneysmart.gov.au to play with your numbers and face your own reality. In the words of Belinda Thomson of Getting Past PR "Sara, when you do write about it, explain how easy it is to salary sacrifice, so you never even miss those extra $$$." Thanks Belinda, well said.
If you stop work for a while and have a partner still working, investigate the spouse contribution facility offered by the ATO.
Check out the co-contribution facility. Get free money from the government
Above all, take good, high quality advice and maximise your situation. You'll pay a fee for it but good advice will pay off in the long term. Email me via Women's Agenda or my site if you need to find a high-quality, licensed financial adviser.
More than ever our future financial security is up to us. We have fewer fall back positions than ever, but we can be heartened by the advances we are making in our careers and in equality generally; I'd just like them to happen a little faster, wouldn't you? Tell me what you think?