Maternity Leave Leads To Less Superannuation

In a study of women and superannuation conducted by Rice Warner Actuaries, women on average lose $45,200 in superannuation savings when taking five years off to raise children, or 26 per cent, less than an equivalent woman who stayed in the workforce until retirement.

These figures clearly show that women who take career breaks and choose to raise a family are disadvantaged when it comes to saving for their retirement. Women already face lower living standards in retirement because Australia's superannuation system is designed around the paid workforce.

Call to include superannuation payments in new parental leave scheme

As reported by The Australian, the Investment and Financial Services Association (IFSA), which commissioned the study, and the Association of Superannuation Funds of Australia (ASFA), are calling on the federal government to include superannuation payments in the new parental leave scheme.

Equal superannuation savings for men and women

IFSA chief executive John Brogden said that whichever paid parental leave plan parliament adopted must include the 9 per cent superannuation guarantee to address "a grossly inadequate retirement" for Australian women because of their low superannuation savings.

Prime Minister Kevin Rudd has proposed an 18-week paid maternity leave scheme, while the opposition has devised a $2.7bn six-month-leave policy.

Mr Brogden said IFSA, which represents retail superannuation funds, wanted to make sure "Australian women get the best deal out of this legislation".

"The way they get that is by ensuring whatever parental leave scheme that parliament adopts for Australian families, and particularly Australian women, that it includes superannuation, otherwise women will continue to be punished for the decision to have children and that is clearly an inequity that needs to be addressed," he said.

The decision over who would fund it, employers or the government or both, would be a matter for the legislation, Mr Brogden said.

Superannuation calculations

Rice Warner's calculations assumed that workers retired at age 65, that their superannuation received returns of about 7.5 per cent, and inflation remained steady at 3 per cent.

The compulsory superannuation guarantee scheme was introduced in 1992, with 9 per cent minimum superannuation contributions introduced in 2001.

Source:
Sydney Morning Herald, March 2010
The Australian, March 2010

April 2010