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the new school of super podcast series

Episode 9

What about women's super?

February 2019

To celebrate International Women's Day, Anne is joined by Joshua van Gestel, Sunsuper's National Education Manager, to discuss wealth equality and closing the superannuation gap as you head into your retirement.

Voice-over: Welcome to the New School of Super, a fresh look at money matters, your super, and the things that could affect your financial dreams now and in future, with Sunsuper's Chief Economist, Brian Parker, and Head of Advice and Retirement, Anne Fuchs.

Anne Fuchs: Hello, and thanks for listening. Welcome to the New School of Super, Sunsuper's podcast series covering investment markets, money matters, your superannuation, and most importantly, making sure you achieve your retirement dreams. Today we are mixing it up a bit, and I have a fabulous fellow. He's been with us on a previous episode, Josh van Gestel, a National Education Manager here at Sunsuper.

Josh van Gestel: Hi, Anne. Thank you, thank you.

Anne Fuchs: Welcome, it's good to have you here. I'm feeling a bit weird, Brian not joining us today.

Josh van Gestel: Yeah, the seat's a bit warm, yeah.

Anne Fuchs: Yes, it does feel a bit unusual. We are talking today about things that aren't investment related as such, which is why Brian's not joining us.

Josh van Gestel: Yes, he doesn't know much outside of that.

Anne Fuchs: That's unkind, but we are talking about women and money. Before we get started though, I'm going to hand over to you, which the job that Brian normally has.

Josh van Gestel: Yes, yes, thanking our sponsors. So yeah, before we start, Anne, just what we're talking about today is general information only. Any advice doesn't take into account our listener's personal situation. I think it's important that anyone listening should consider their circumstances, and think about getting personal advice before acting on anything we talk about. As you know, Anne, you've got a wonderful advice team, and they can be contacted on 13 11 84 to assist them.

Anne Fuchs: Listeners can also get a copy of our product disclosure statement on the Sunsuper website as well. That's probably worthwhile highlighting that.

Josh van Gestel: Thank you, Anne, yes.

Anne Fuchs: This podcast today is in honor of International Women's Day, and it's important we stop and reflect on the challenges women face when it comes to wealth equality globally, but in Australia, what is a wealthy country. We want to talk together and encourage our listeners to think about what more they can be doing to bride that gap.

Josh van Gestel: Absolutely.

Anne Fuchs: That wealth equality gap.

Josh van Gestel: I think, and probably to show how much of a concern it is, is we've got employers really starting to actively think about not just the pay gap, but also thinking about the inequality in retirement. I think it's between men and women, we've got the government thinking about it, we've got a lot more measures now, especially for when women might leave the workforce to raise children, but I think some of the stats are actually quite scary.

Anne Fuchs: Well, I have a son and two daughters, and I think it's outrageous that on average, women are earning $245 less per week than men, and that a 20-year-old woman is earning ... let's call it 19%, close to 20% less than her male counterpart in the same job. Then that doesn't even take into account the fact that they're jobs in sectors that we say as a society we value; looking after our elderly, looking after our young ones, so aged cared, childcare, that those sectors are incredibly underpaid, and in fact, childcare workers are paid less than retail workers and hospitality workers.

Josh van Gestel: I think when you combine all that, the scary thing is, certainly from a retirement perspective, that we are seeing women on average retire with about half as much as a male counterpart. I think the other thing, just to a point you made, was that we in our society generally see that it is women who take time off to look after children and raise them, but the other thing we're also seeing is that older women are then leaving the workforce again in many instances, to help care for their parents or for the in-laws. There's these huge periods generally within our society for women where they're absent from the workforce, and their super stops, effectively.

Anne Fuchs: And you know, I have three children, 12, 10, and 8, and I am the main breadwinner in our family. Even though I took very short breaks, you know, three months, two months, four months, my super wasn't getting paid over that period, and I think about now, and I was back in my 40s, almost mid-40s, as sad as that is, and I didn't know or think about in my early 30s the fact that my employer actually wasn't contributing to super while I was off-

Josh van Gestel: Absolutely.

Anne Fuchs: ... and the impact that has in compounding interest. Probably ... not probably, and I'm quite certain the fact that I was being paid much less than my male counterparts. Even though I'm in a great job in a secure role, I'm still going to be in the back foot compared to a male equivalent in my position.

Josh van Gestel: I think although we're talking today and at the moment about whether it's thinking about the effects on retirement, or even the pay inequality, I think the other issue that's important to probably just highlight is that it is women who will more likely be subject to financial abuse, who will have control of money in a relationship generally fall to a male, and the statistics there are alarming as well, that three in five Australian women will actually have some form of financial abuse.

Anne Fuchs: Yeah, CoreData published that recently. I think it's absolutely terrible. It's a form of domestic violence. It's all well and good, I think. I think it's all well and good to encourage women to think about their retirement savings gap and do something about it, but it can be so daunting to be on the back foot so profoundly, and when you're in a lower paid job, but sticking your head in the sand equally too is only going to exacerbate the problem. No matter what salary you're on, these simple tips that we could have a quick chat about are worthwhile really reflecting very much about.

Josh van Gestel: I think there's also opportunities there that people just aren't aware about.

Anne Fuchs: Like?

Josh van Gestel: There's a few things to think about, and from my perspective, I've got a wife who has gone from being very highly paid, to leaving the workforce and now coming back into the workforce on a part-time basis. There's strategies worth implementing that I think I know about because I live and breathe the industry.

Some of those strategies that people may not be aware of, is as your income drops, the government really gives three free kicks, as I see it. If you earn beneath $37,000, then the tax that normally is deducted from the contributions that your employer's required to make, super guarantee, that tax is effectively refunded. That's the first thing that it's not really a strategy you have to think about, it just automatically happens. I would suggest most people don't know about it. When your incomes drops, there is a payback.

Anne Fuchs: There's also, I guess, if you have a spouse that's then earning more than you, the concept of spouse contributions, because one of the things with women retiring in poverty and this increased phenomenon is that they might have given up their career, and they haven't had superannuation contributed at all, and then they divorce in their 60s, and then all of a sudden they have barely any assets.

Josh van Gestel: That's right.

Anne Fuchs: This concept of spouse contributions-

Josh van Gestel: If I as a spouse make a contribution-

Anne Fuchs: To your wife, yeah.

Josh van Gestel: ... to my wife's account, and I do that contribution from our joint savings, it's coming from our combined wealth, that I then am entitled to an offset on my tax return of up to $540. There's two things happening here. I as the contributing spouse am getting a tax advantage. Meanwhile, my wife is actually benefiting from seeing her super balance grow.

Anne Fuchs: As sad as it is with one in two people divorcing, it's a nice insurance policy for her that she's actually building up some financial independence in terms of her retirement savings.

Josh van Gestel: That's right, that's right. There are two other things as well. One thing that the member can do, and in my case, that my wife can do, from again, our personal savings, she can make a contribution herself, and if she earns less than $52,600 odd dollars, then the government will actually throw in up to $500 as well.

Anne Fuchs: That's called a co-contribution, if you hear about it.

Josh van Gestel: That's correct. To your point, Anne, that actually helps the spouse in this situation, or any person, actually, grow their superannuation when they may be on lower income. The only other thing that I'd like to mention as an important strategy is I also have the ability in my relationship, and as many people would in their relationships, that there may be one person who's earning more than the other, they've got higher superannuation contributions going into their account.

There is this ability to split contributions, for me to at the end of the financial year, actually take some of those contributions have come into my account, and actually put those into my wife's account. Doesn't give me a tax advantage, doesn't give me a savings advantage, but where the equalization is, is that it's actually making sure that we're spreading out our retirement wealth across both accounts.

Anne Fuchs: Yeah, that's right, yeah. I think there are lots of people that aren't in relationships too, and just good old fashioned salary sacrificing. I spoke on a previous episode with Brian about New Year's resolutions, and one of ... I think about the money I waste on not being organized and packing my lunches. It's $10 here, $10 there, and it adds up. I do think just the principle of just being organized, and using that money to contribute to superannuation rather than a very expensive sandwich.

Josh van Gestel: Absolutely. I present to a lot of members, and I talk about superannuation is doing small nudges. It is that sandwich, it is that coffee, it's diverting that money. It's a small nudge, but you're doing it numerous times, and those all add up.

I think the other thing is though, that every person can do in making sure their super is growing and working for them is actually to think about how they're investing it. What is it that you're actually able to achieve not just by putting additional money in, but actually growing that through thinking about the investment strategies that we offer?

Anne Fuchs: And look, I think that's a really good point, Josh. Sunsuper have a service offering for our members where our members can access simple, trusted financial advice over the phone. If you're a woman and a member of Sunsuper, and you want to think about, and you're thinking about what more you could do to maximize your retirement savings, and to make sure that money's invested to maximize, again, your retirement savings, the best thing you could do is call Sunsuper.

We live and breathe this stuff day in, day out. We help women like you, our listeners, every day do more so that you can bridge that gap, that wealth equality gap that exists. We desperately want you to. We want you to live the life that you deserve to live and fulfill your retirement dreams. We celebrate today, Women's International Day, and Josh, I love your ... you're an honorary feminist in my eyes.

Josh van Gestel: Thank you, Anne, and thank you for inviting me in Brian's hot seat.

Anne Fuchs: Yes, it was a pleasure to have you.

Josh van Gestel: It's been wonderful, thank you.

Anne Fuchs: Thank you, listeners, and we'll look forward to you joining us again soon. Thanks.

Voice-over: This has been the New School of Super. For information and inspiration to help you plan your future, manage your super, and enjoy your retirement, visit Sunsuper.com.au/thedreamproject, or if you've got a superannuation or an investment question you'd like Brian and Anne to discuss, then get in touch at newschoolofsuper.com for it to feature in one of our future New School of Super podcasts.

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