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We are bridging the super gap

ANZ introduces an important new initiative: extra super for its female employees.
When you look at today’s superannuation system, you can see it wasn’t designed with the specific needs of women in mind. 
Based on the latest data, the average woman retiring now has around half of the average man’s super balance.1
One of the main reasons for this is that, on average, women earn less than men, and because super is a percentage of your salary, that means less super.
Women also tend to spend more time out of the workforce, and are more likely to work part-time to care for family, which again means less money for super.
Doesn’t really seem fair, does it? And it’s even worse when you consider that women retire earlier and live longer than men. This means they’re likely to need more super for a comfortable retirement.

Helping women bridge the super gap

ANZ believes it’s important to help women bridge this gap in retirement savings and has announced two initiatives to help its female employees build stronger superannuation balances:
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1. ANZ will make an additional $500 super contribution to every fixed-term and permanent female employee each year from 8 January 2016
2. ANZ will make super contributions to all employees for any period of paid and unpaid parental leave an employee may take from 1 October 2015.
Joyce Phillips, ANZ Wealth CEO, says “these initiatives are all about supporting the future financial wellbeing of our staff”.
“We are acknowledging that many women are taking time off or working part-time to manage the responsibilities of raising a family. We want to help ensure that these decisions don’t have a negative impact on their retirement savings.”
ANZ estimates that to address the financial challenges presented to women, such as a longer life expectancy, women require 10 per cent more superannuation than men at a retirement age of 65. Given the current minimum Superannuation Guarantee Contribution of 9.5 per cent, this is equivalent to 10.5 per cent per annum; or an additional 1 per cent on top of the 9.5 per cent their employer is contributing. The $500 payment to ANZ's female employees is equivalent to an extra 1 per cent in super for earnings up to $50,000. 
“For many of our staff, the extra $500 each year is a good start to bridging that gap. ”
Joyce Phillips, ANZ Wealth CEO

What difference can it make?

Sarah is 20 years old and earns $30,000 per year working full-time. Let’s assume Sarah:
  • works full-time until age 31
  • works three days per week between the ages of 31 and 45
  • works full-time again between the ages of 46 and 65.
If Sarah earns 9.5 per cent super contributions for the remainder of her career, her super balance at age 65 will be approximately $635,000^.
If Sarah received an extra $500 super per year, her super balance at age 65 would be about $715,000. That’s an increase of $80,000, effectively meaning that at retirement, Sarah has nearly 97 per cent of the superannuation balance she would have had if she had not worked part-time to care for her children.
Phillips says “women can also make the choice to contribute a little more to super and achieve similar benefits through a salary-sacrifice arrangement".
“If women can salary sacrifice as little as $20 per week to their super, it will mean an extra $884 going into their super each year after tax2. Small contributions can make a huge difference over a number of years, so it’s definitely worth considering if you can afford it.”
 
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ANZ Women @ANZ We are bridging the super gap ^ Back to top

1 The Association of Super Funds of Australia partnered with State Street Global Advisors, The future of retirement income, March 2015.
2 Based upon a contributions tax of 15% for individuals earning under $300,000 per year.
* Deaths, Australia, 2013 – Australian Bureau of Statistics
^ Assumptions:
- A working life of 45 years (20–65).
- A starting salary at age 20 equal to $30,000 with 3 per cent increments applied per annum.
- An assumed investment return of 5.1 per cent (after deducting relevant fees and tax).

If you are setting up a salary-sacrifice arrangement it is important to remember that there are limits on the amount that you can contribute. Most people can contribute up to $30,000 within each tax year (July – June), including their employer's 9.5 per cent super guarantee contribution. This is called the concessional contributions cap. For those closer to retirement the cap is higher. Check the ATO superannuation rates and thresholds for more information.
Superannuation is a long term investment structure and the rules and regulations governing it are subject to change. ANZ recommends that you keep informed of changes to superannuation and any potential impact any changes may have.
The views and opinions expressed are those of the author only and do not necessarily state or reflect those of ANZ. The information provided is general in nature only and does not take into account your personal objectives, financial situation or needs. Please consider its appropriateness to you before making any investment decisions. Past performance is not an indication of future performance. ANZ recommends that you read the applicable Product Disclosure Statement or offer documentation and consider its appropriateness to you prior to making a decision to acquire or hold a financial product. Information is current as at the date articles are written as specified within but is subject to change. ANZ and its related entities make no representation as to the accuracy or completeness of the information.
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