Ladies, mind the gap! How the gender pay gap could affect your superannuation

On average there’s still a considerable gap between men and women when it comes to retirement investments. We look at some of the reasons why and suggest five tips to help women bridge the gap.

Considering women live longer than men on average (84.4 years for women compared to 80.3 years for men)1, it’s important for women to have enough money invested for their retirement. However, statistics show the average man’s superannuation balance is nearly twice the size of the average woman’s super balance.2

What are some of the reasons behind this?

On average, women earn less money than men

The national gender pay gap is currently 16.0% and has hovered between 15% and 19% for the past two decades.3

mind your gap 1

SourceWorkplace Gender Equality Agency (WGEA) Gender pay gap statistics – February 2017. The gender pay gap is the difference between women’s and men’s average weekly full-time equivalent earnings, expressed as a percentage of men’s earnings.

The gender pay gap is influenced by a number of factors4, including women being more likely to be primary carers for family members (children, elderly relatives or people with disabilities), work in part time or casual jobs, hold lower paid roles and be less represented in senior executive positions.

mind your gap 2

Source: WGEA Gender workplace statistics at a glance – February 2017, WGEA Data Explorer

The gap starts early – average undergraduate starting salaries are 6.4% less for women, and average postgraduate salaries are 18.96% less for women.5 The gender pay gap grows with seniority, climbing to 26.5% for key management personnel – an annual difference of more than $93,000 in total remuneration.6

Women in small business

Women are moving towards small business with 2015 figures showing that 31% of small business owners/managers were women.7 When you consider there are over 2 million small businesses in Australia, accounting for 97% of all Australian businesses (by employee size), this translates to a large representation of women.8

Most Australian small businesses (63%) are sole traders9 and since sole traders generally aren’t required to make superannuation guarantee (SG) payments for themselves10, this means women who are self-employed or run small businesses may not be making regular contributions to their super. When you consider that 49% of small business employees earn less than $20,000 per year11, it reinforces the potential gap women in this position could face in retirement.

It all adds up – or doesn’t

These factors all combine to contribute to a considerable wealth gap in retirement – with an overall gender difference in average superannuation balances of 44.3%.12 Fortunately, there are things women can start to do now to help them be financially better off in retirement. And the sooner you can add even small amounts to your super, the longer there is for compound interest to work its magic.

5 tips to help bridge the gap

Here are five options you could consider, depending on your situation:

1. Salary sacrifice

If you have extra cash or income at any time, you could salary sacrifice to build your retirement funds and potentially reduce your taxable income. If your employer offers the option to salary sacrifice, you can ask them to allocate a portion of your before-tax wage or salary as an extra contribution to super. Salary sacrifice contributions come out of your before-tax salary and are only taxed at 15%, up to certain limits. This may be less than your normal tax rate, so salary sacrificing could be a way to build your super balance and reduce your taxable income at the same time.

2. Make non-concessional (or after-tax) contributions

If you have spare cash on hand, whether an inheritance, dividend payments, a bonus or even just change after bills, you may be able to contribute this to your super. You can make after-tax contributions to your super account of up to $100,000 per financial year, provided your total super balance at the start of the financial year is less than $1.6 million. If you are aged under 65, you may be able to bring forward up to three years of after-tax contributions, allowing you to invest up to $300,000 in one go, if your total super balance at the beginning of the financial year is less than $1.4 million or $200,000 if your total super balance at the financial year was less than $1.5 million.13

3. Spouse contributions

Your spouse can add money to your super from their after-tax income. If you are not working or are on a low income and your spouse contributes to your super fund, your spouse may be entitled to a tax offset of up to $540 in the 2017-18 financial year, dependent on meeting certain criteria. This could mean your spouse saves on tax today while helping you to grow savings for your retirement.

4. Government co-contribution

If your salary is below $51,813 in the 2017-18 financial year, you may be eligible for the government co-contribution (up to $500). You will need to make an after-tax personal contribution to be eligible to receive a government co-contribution. Women who earn above this range but plan on taking maternity leave part way through the financial year could still be eligible if their income falls below the threshold as a result of the maternity leave or unpaid leave taken.

5. Review your situation regularly

Your financial needs and priorities may change over time as your circumstances change – such as getting married, having a child, going through a relationship break up, or if your partner passes away. You may want to consider protecting your savings to account for any changes like these by updating your will, super beneficiaries, insurance or any other financial commitments you may have.

Investing for the long-term

It’s important to remember that super is a long-term investment. Generally, contributions to a superannuation fund are preserved and the government has placed restrictions on when you can access your preserved benefits. There are also annual limits that apply to the amount you can add to your super each year, so it is important to consider how much you have already added to your account (or accounts) during the financial year to know which strategies can work for you. See the ATO website for more information.

Want to see if your are on track to retire comfortably? Book a free consultation to discuss your options online or contact us on

Fortress Financial Solutions founder Chris Black is an award-winning financial planner based in Toowoomba who specialises in superannuation, investing, business succession, cash flow management, retirement planning and personal insurances (including life insurance, income protection, total permanent disability and trauma insurance).

Complied by Emma Linton Doig, Fortress Financial Solutions.


1. Source: ABS Data (2013-2014)
2. Source: WGEA, Superannuation & gender pay gaps by age group – August 2016
3. Source: WGEA, Gender pay gap statistics – February 2017
4. Sources: WGEA, Superannuation & gender pay gaps by age group – August 2016  and Australian Bureau of Statistics Gender Indicators – August 2016
5. Refers to postgraduate coursework degree graduates. Source: WGEA, Gender workplace statistics at a glance – February 2017
6. Source: WGEA, Gender Equity Insights 2017 – Inside Australia’s Gender Pay Gap
7. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
8. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
9. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
10. Australian Taxation Office – The self-employed
11. Source: Australian Small Business and Family Enterprise Ombudsman, Small Business Counts: Small Business in the Australian Economy
12. Overall gender difference is average superannuation balances refers to the average of 8 separate age bands across people 25-64 years of age. Source: WGEA, Superannuation & gender pay gaps by age group – August 2016
13. You can only use the bring forward option if you didn’t trigger it in either of the previous two financial years.

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This information does not consider your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs having regard to these factors before acting on it.

This information is current as at 1 July 2018.

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The tax position described is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ, and you should seek independent professional tax advice.

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or visit the ATO website.



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