Calling the new report from the Senate inquiry on women’s economic security, A husband is not a retirement plan, was a good move. It reminds us why such a critical issue for half of our population has until recently been marginalised.
As the report makes clear, formal frameworks and many workplace practices are still well out of kilter with the way women actually work these days – and their ability to save for retirement.
The barriers mostly reflect an era when women were hardly in the workplace at all, much less providing for themselves and families, in an environment where self-funded retirement is encouraged.
The report recommends a range of measures to tackle the problem, including one of the recent federal budget proposed changes to superannuation: abandoning the planned scrapping of the low-income superannuation tax offset which affects 3.4 million low-income workers, mostly women, on incomes less than $37,000.
But perhaps most importantly, the report points out that the current dire situation which sees women end up with 45 per cent less than men in average retirement savings is not a legacy issue.
Young women today are facing many of the same barriers to saving that affected the Baby Boomer women now struggling to make do in retirement.
That includes the gender pay gap, pregnancy discrimination and broken tenure in jobs due to caring obligations, lack of flexibility, and portability of benefits. And women continue to outlive men.
Acknowledging the reality
In many ways the analysis and recommendations are, however, about addressing a legacy of another kind. The current system is based on a traditional male-breadwinner model which simply doesn’t take account of women’s workforce participation and needs.
Luckily, the Senate committee hasn’t shied away from this difficult reality and finds there is a pressing need for a series of fundamental changes to address the complex problem.
This is not a case of simply urging women to wise up and take retirement savings seriously, although the need for more financial literacy is noted. It’s about looking closely at the many factors which interact to compromise women’s ability to access and combine regular paid work with their unpaid caring obligations.
Australia “needs to redouble its efforts to achieve equality at work – paying women equally, offering access to career development and leadership opportunities and accommodating rather than penalising those who care for others”, the report states.
Even the straightforward suggestion that all government policy analysis on retirement incomes compares the impact on men and women could have profound consequences for improving outcomes for women.
That said, it’s only realistic to outline short and long-term levers to be pulled if the basics are to shift. Some of the recommendations are stepping stones which are needed to address current inequities, while others could take years to deliver structural change.
Including the superannuation guarantee on the national paid-parenting leave is a no brainer and was part of the original recommendations for the scheme. But better late than never.
Likewise, an increase in the paid parental leave to 26 weeks should be high on the agenda. These measures bring Australia in line with many countries in the Organisation for Economic Co-operation and Development, which the report notes.
In the short term, moves to make it easier for organisations to make higher superannuation payments to women such as ANZ’s initiative, make sense and could encourage others to act by removing the current red tape.
The way many women patch together jobs today can be like a jigsaw of different flexible and casual roles to fit in with caring responsibilities. Redesigning practices to reflect this and allow for retirement savings include introducing a duty from employers to meet a flexibility request; removing the exemption for the super guarantee for employees earning less than $450 a month; and raising the superannuation guarantee to 12 per cent earlier than the current timetable.
Many experts have long argued that the effective marginal tax rates for second income earners are acting as a disincentive and well overdue for review, so referring this to the Productivity Commission is a step in the right direction.
Although the gender pay gap is getting more attention these days, and the report notes the work of some organisations in addressing the gap through pay audits, there is a need to look for more comprehensive responses.
While there is a recommendation to review the Fair Work Act 2009 and consider less adversarial mechanisms than those currently available for addressing the gap, momentum for more transparency on pay is also gathering pace internationally. The British government, for example, is due to introduce legislation this year to make every private-sector company with more than 250 employees publish the gap between average male and female pay.
Further analysis and action in Australia is needed too, and the report notes the importance of support for the work by the Workplace Gender Equality Agency.
This is a timely report which provides a starting point for action from redressing past anomalies to accelerating planned initiatives. It sets a much needed agenda for an overhaul which will need persistence and more detailed plans for action in the future.
And it’s a reminder of some essential questions we need to ask ourselves of our society about what we value, and how individuals, workplaces and government can contribute.
Unless changes are set in place there is no reason to assume that the current combination of conditions will make outcomes any different for the cohort of girls now leaving high school.
And if that’s the case, they may well be asking themselves at retirement the question former sex discrimination commissioner Elizabeth Broderick often posed: is poverty to be the reward for a lifetime of care?