With the coronavirus outbreak (COVID-19) wreaking havoc on the global and Australian economies, new research by AMP shows the extent of the economic impact of COVID-19 on the super account balances of Australian women.
Diana Mousina, Senior Economist at AMP Capital, and AMP Data Insights Manager, Tracy Lewis, discuss the latest findings on the widening gender super gap. These include contributing factors such as job losses, the gender pay gap, and early super withdrawals.
Watch to find out ways to rebuild your super savings if you’ve accessed the government’s early super access scheme, and what you can do to help close the gender super gap.
DIANA: Hello, I’m Diana Mousina and I'm a senior economist at AMP Capital.
Today I'll be talking with AMP Data Insights Manager, Tracy Lewis, about the gender super gap. Tracy will tell us about how the economic impact of coronavirus is widening the gap for Australian women's super amounts and what can be done about it.
So Tracy, what exactly is the gender super gap?
TRACY: Thanks Diana. You've probably heard of the gender pay gap, that tracks the average weekly earnings between men and women.
Well, the gender super gap monitors the average superannuation balances of men and women and tracks these as they approach retirement age. Australia has one of the best retirement income systems in the world but, sadly, not everyone is benefiting from it equally.
On average, women retire with $79,000 less in super than men, and one in four women
retires with no super at all.
DIANA: Can you tell us about your latest research into the gender super gap. What did you find?
TRACY: It's unfortunate, Diana, that we've seen the super gap widen even further this year,
following the Australian government's early access to super scheme.
As a reminder, this scheme was announced earlier this year, in response to the economic
impact of the coronavirus. It allowed eligible people to withdraw up to $10,000 from their super between 20th April and 30th June and a further $10,000 between 1st July and 31st December 2020.
Our numbers show that among the people who withdrew money as part of this scheme, the gender super gap widened from 25% before the withdrawal to 29% after it.
DIANA: Tell us more about why this is happening.
TRACY: When we looked at the results from the first withdrawal period, we learnt that women on average withdrew less from their super than men. That sounds positive, however the withdrawal made up a larger percentage of their starting balance.
DIANA: What does this mean for Australian women?
TRACY: Because women typically had a lower starting balance to begin with, by withdrawing money from their super, they were withdrawing a larger proportion of what they had accumulated. This means they'll potentially have much less for their retirement years.
DIANA: Are there any women who are at greater risk of this happening?
TRACY: Yes, we've seen people working in the recruitment, retail and hospitality sectors make up almost half of the early release withdrawals and we know that female employees make up a large portion of the workers in these sectors. Our numbers also show that older people have withdrawn more under this scheme than younger ones.
DIANA: For women who might have withdrawn money as part of the early super access scheme, what can they do to try to rebuild their super?
TRACY: There are a few things, Diana. They could think carefully about withdrawing money in the second round of this scheme, particularly if the money will be spent on non-essentials.
Some external research has shown that 64% of the funds withdrawn in round one of the early access scheme was spent on lifestyle items like clothing or alcohol. Before withdrawing money from super for bills and other essentials, it's worthwhile exploring options available from home loan and utility providers.
Ultimately, if someone still needs to withdraw money from super, they should consider setting up a plan for how they could repay this money back in the future in the form of personal contributions. This will help to rebuild super.
And finally, it's so important that all Australians, not just women, are aware that this is happening. The gender super gap has the potential to have a major impact on our financial future, so it's important that we are all part of the solution. I encourage all Australians to start a conversation with the women in their lives, to shed some light on this issue.
DIANA: Thanks Tracy for sharing these insights with us.
Retirement can often seem like a long time away, but if we're diligent from the outset then it can make a big difference later on. Let’s do a quick recap:
- The gender super gap tracks the difference in average super amounts between Australian men and women.
- Following the Australian government’s early super access scheme, the gender super gap has widened even further.
- Early super withdrawals made by women made up a larger percentage of their starting balance compared to men.
- Anyone who has withdrawn super early could consider rebuilding their super once they are financially able to.
- Speaking to family and friends about the gender super gap is one of the first steps towards closing the gap.
Please remember this video hasn't taken your circumstances into account. It's important to consider your circumstances before deciding what's right for you.
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