Retirement Income: What’s Choice Got To Do With It?

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On 25 July 2013, Prue Cameron of The Australia Institute published a report titled “What’s Choice Got To Do With It?” tackling the reasons why Australian women retire with significantly less superannuation resources than their male counterparts. According to the research, the financial disadvantage Australian women are facing in retirement has nothing to do with whether they have a family. The research found that Australian women will retire with significantly less savings than men, even if they do not have children or care for elderly parents and remain in full-time employment.

Ms Cameron suggests that the choices made by women (or the choices imposed upon women), may have little to do with the eventual financial outcome for them. Instead, Ms Cameron identifies the fact that women continue to earn, on average, 17.6% less than men and that this is not a result of their “choices”.

The report contains an analysis of other research identifying and testing the factors leading to income disparity between men and women. Ms Cameron, (and other researchers), conclude that simply being a woman accounts for a significant portion of the difference in incomes earned by men and women in this country. This is not just a product of the effects of industry segregation, labour force history and the under-representation of women in certain professions and in larger firms.

The report usefully identifies by way of illustration, some examples of gendered salary differences for men and women graduates in particular fields, with identical qualifications and work experience, but with the male graduates on average receiving a starting salary of approximately 5% more than their female counterparts.

The impact upon women’s retirement savings planning can be significantly worsened when the consequences of a marriage or relationship breakdown are also factored in. Women who have time out of the workplace, to provide care to children, with an expectation that they will continue to share in the income, earning capacity and superannuation resources of their partner, may have those retirement expectations seriously challenged upon the end of the relationship. While superannuation may now be the subject of splitting orders between parties as part of a family law settlement, a significant disadvantage may still fall to the non- member party, if the other person continues to have a higher income and is able to make further contributions into superannuation into the future, in which the other spouse will not share.

Earlier in July this year, The Daily Telegraph commented upon a survey undertaken by SunCorp which suggested that a staggering 86% of family law settlements failed to “take into account” superannuation as part of the property to be divided between the parties.

Getting advice about this is essential. We ensure that superannuation is always properly considered as part of the property and resources of the parties. There may be good reasons to agree that superannuation will not be formally adjusted or split between the parties, but usually in circumstances where one party benefits from receiving more of the non-superannuation assets.

Again, it is often women who trade off the benefits of a future retirement nest egg and retirement income because they must prioritise securing somewhere to live in the “here and now”.

In circumstances where the pay inequality between the genders has not improved for almost 20 years, it appears that this problem will not be quickly resolved.

In the meantime, Australian women are encouraged to take a continuing interest in planning for and understanding their retirement income needs. The economic consequences of the end of marriage still fall most heavily upon the shoulders of women.


Di Simpson is a Director at Dobinson Davey Clifford Simpson Family Law Specialists, 18 Kendall Lane, New Acton, Canberra ACT 2601 and can be contacted on (02) 6212 7600.