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5 things you can do to bridge the superannuation gender gap

There’s a gender gap in super that can’t be ignored. On average, women in Australia retire with 47% less in super than men. In dollar terms, the gap is worth $70,000, with the average super nest eggs for women and men being $80,000 and $150,000 respectively.1

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The reasons for the gap are simple. Contributions to super mostly come from your employer and are calculated as a percentage of your salary. The size of your retirement nest egg therefore depends on how active you are in the labour force during your working life, and how well you’re rewarded for it.

This poses challenges for women, whose working lives are often interrupted by breaks to have and raise children. These disruptions can be heightened further by the rising cost of child care, which for many families can offset any financial advantage that might come from a complete return to work.

If you’re in your 30s or 40s and married, you’re probably thinking you’ll have the strength of two salaries and two super balances to get you through a comfortable retirement, but don’t underestimate how drastically your circumstances can change between now and then. After all, 48% of Australian women over the age of 65 are either widowed or divorced.2

5 things you can do to close the gap

1. Consolidate your super into one account

While more people are starting to realise how disadvantageous it can be to have money in multiple super accounts, as recently as June 2018 the ATO reported that 36% of Australians still have funds in more than one account.3

There may be insurance or other benefits that come from maintaining multiple super accounts, but if you have multiple accounts simply because you’ve neglected to consolidate them, you may be losing some of your retirement savings in unnecessary fees.

Consolidating (i.e., combining) your superannuation into one account means you’re only charged fees on the entire pool of savings by one super fund, rather than being charged by multiple funds on each of the broken-up pools of your savings. It’s important however to consider any insurance you may have with your funds and where your future employer contributions will be paid. Read more on the other benefits of consolidating your super.

2. Take advantage of spouse contributions

If you take career breaks to have and raise children, your income will likely decline for those periods, which means your employer contributions to your super balance will also decline.

These career breaks, and the reductions in income that come as a result, are often the catalyst for the eventual gender gap in super savings at retirement.

To help families absorb the impact of these career breaks, the government introduced the concept of spouse contribution, which allows a person to make a special contribution into their spouse’s super account and be rewarded with a tax offset incentive for doing so.

In effect, one spouse gets a needed boost to their retirement savings while the other gets a tax offset to reduce their assessable taxable income, so there’s a dual benefit for the couple.

As the law applies today, the tax offset on offer is 18% of any contribution amount capped at $3,000, so long as the receiving spouse earns no more than $37,000 in income for the year.

If the receiving spouse earns $37,000 or less and the giving spouse contributes $2,000, the offset is $360 (18% of $2,000); if they contribute $3,000 the offset is $540, and if they contribute $5,000 the offset is still $540 as the calculation is capped at a $3,000 contribution.

What if the receiving spouse earns more than $37,000?

This is where it gets confusing, but stick with us. If the receiving spouse earns more than $37,000 but less than $40,000, the giving spouse will still be eligible for an offset, but it won’t be calculated as 18% of the contribution amount. Rather, the percentage will reduce down from 18% as the income of the receiving spouse increases from $37,000 to $40,000.

What if the receiving spouse earns $40,000 or more? As the law applies today, unfortunately if the receiving spouse earns $40,000 or more in income for the year the giving spouse will not be eligible for any tax offset.

You can see the above mentioned thresholds in the table on our spouse contributions page.

How do you make a spouse contribution? If you and your spouse are both members of Sunsuper, it’s really easy to make a spouse contribution. Either make a BPAY payment online on our website, or complete and download the Spouse Contribution Advice Form.

If only one of you is a member, the non-member can join Sunsuper online in 5 minutes.

3. Salary sacrifice some of your wage

You’re probably familiar with the concept of salary sacrificing, and you may do it already in relation to a vehicle lease, for example. In the same way, salary sacrificing super involves your employer contributing extra amounts of your salary to your super fund on your behalf.

This is separate to the superannuation guarantee super payments your employer is legally obligated to pay on your behalf (as a percentage of your salary). A salary sacrifice arrangement is in addition to those payments and while it’s not compulsory, you may realise some tax benefits that may make it worthwhile (depending on your situation).

The advantage arises because the salary sacrificed amounts that go into your super fund are taxed at a concessional rate of 15%. In other words, if you salary sacrifice $100 of your pre-tax income into super, $85 of it will remain after tax and go towards to your retirement savings.

Compare this result to the ordinary scenario of the $100 being paid to you in wages, which are subject to regular income tax. In this scenario, depending on your income bracket, you might forego as much as $30 or $40 in tax, leaving you potentially with much less than $85.

Like everything ATO-related, there are certain rules around salary sacrificing super that you need to be aware of and you should carefully read the ATO’s website or visit our salary sacrifice contributions page.

4. Contribute future pay rises or mortgage payments

Two triggers where it may make sense for you to make extra contributions to your super are when you get a pay rise and when you pay off your mortgage.

Because long-term saving is as much about controlling expenditure as it is increasing your earning power and making smart investment decisions, if you find yourself with extra cash by virtue of a pay rise or freed up mortgage repayments, it might be wise to direct the funds into your retirement nest egg rather than spend it now.

There is a cap on how much super you can contribute in a given financial year and still take advantage of the 15% concessional tax rate (it’s currently $25,000), so it’s important you understand or seek advice about whether this course of action is right for you.

If you’d like to learn more about the concessional contributions cap, visit the ATO’s website on the subject.

5. Make yourself eligible for the government co-contribution

Another super-boosting mechanism to be aware of is the government co-contribution, which may be relevant in periods when you are earning less than your regular, full-time income.

The simple (and great) thing to understand about the government co-contribution is that there is no need to apply for it. If you make an after-tax contribution and you’re eligible in a given financial year the government will automatically deposit the calculated co-contribution amount into your super fund.

The trick then is knowing if you’re eligible, or how you can become eligible. First things first: You must earn less than the high income threshold to be eligible - this means if your income is higher than $54,837 you’ll be ruled out.

If your salary falls below $54,837, you’re then still only eligible for the co-contribution if you meet the other eligibility criteria. One of those is that you made an after-tax personal super contribution into your super fund during the financial year your income is less than $54,837. If you haven’t done this, you won’t be eligible for the co-contribution. You can learn more about the eligibility criteria on the ATO website.

What if your income is less than $54,837 AND you meet all the other eligibility criteria?

If you’re eligible for the co-contribution, the next thing worth working through is how much you’ll actually receive. The maximum amount the government contributes is $500.

Fortunately, the ATO has a co-contribution calculator you can use to work out how much of the $500 you’re likely to receive from the government. You can also learn more about this topic by visiting our government co-contribution page.

We hope these tips go some way to helping you take action when it comes to your super, so you can live out a comfortable (and, importantly, enjoyable) retirement.

If you’re currently a member of Sunsuper, make sure you take advantage of our financial advice options to ensure you’re making decisions that result in outcomes best suited to your situation.

If you’re not currently a member of Sunsuper, we’d love to have you. You can learn more about joining the fund, or if you’re ready to join you can join online in 5 minutes.

1 Percapita, Not So Super, For Women: Superannuation and Women’s Retirement Outcomes, July 2017.

2 Percapita, The ‘Herstory’ of Superannuation, August 2020..

3 Australian Tax Office, Super Data: multiple accounts, lost and unclaimed super, October 2019.

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