When we talk about women’s wealth accumulation, what we really want to explore are the structural and cultural barriers that affect a woman’s journey to securing a financially stable future. What we really want to know is – are women in disadvantage simply because they are women? And if yes, what can we do to narrow the gender-based wealth gap?

In the article “Lower pay, lower wealth a woman’s lot in life,” Matt Wade identifies a statistic that sees the average earnings advantage of full-time men growing to 18.2% over full-time women. If this factlet makes you raise an eyebrow, wait until you find out from Jane Gilmore’s “Think 18.6% is a bad pay gap? Try 52%” that the pay gap in Australia is more than 50%.

The numbers span throughout various industries, job positions, and age ranges, but they are the numbers. And they reflect decades of truth.

And wait, there’s more:

  • The gender pay gap in management ranks has approached 45%, 27.5% in the executive level, and 23.5% among senior managers. This because women gravitate to roles the market usually sees as having lower value, and higher paying roles lack quality flexible work.
  • The double bind when negotiating pay – when asking for pay increases, women are typically judged more harshly than men, leading to less women taking the plunge.
  • Over a fifth of employed women take unpaid leaves to take care for the children, relatives.

As a result, women accumulate lower amounts of superannuation, or valuable money in their retirement.

We see this cycle because of many factors, like race, disability, life events, socio-economic status, money attitude between the sexes, financial confidence, and financial education, but we will identify two that impact on women’s wealth accumulation:

1. Lower pay relative to men

2. Caring responsibilities and unpaid work over a woman’s lifecycle (from entering the workforce the first time, career progression, pregnancy, caring for children, to re-entering the workforce)

These interconnected issues are barriers to a woman’s chance to fully benefit from the retirement income system. Unequal division of caring responsibilities, the lack of economic value placed therewith, and the limited availability of flexible work arrangements, financially penalise women.

What can be done?

At the recent Financial Services Council annual conference, it has been suggested that “a superannuation guarantee contribution of 18 per cent would be required to bridge the gap between the retirement incomes of men and women.”

Proposals to change the rules on contributions to superannuations to increase the flexibility of the caps give hope to the current situation. “The tax reform process gives us the opportunity to see if there is anything more that can be done, particularly around the flexibility of contributions.”

“There is also a new reference to the Senate Economics Committee for an Inquiry into ‘Economic security for Women in Retirement’ for report by the first sitting day in March 2016,” says Assistant Treasurer, Josh Frydenberg.

Eradicating the gender wealth gap and its causal factors will need a long term effort. Let us hope to see the government pursue measures to address women’s disadvantages in the superannuation scheme. That, or reward unpaid caring work in the retirement income system.

Related Links:
Bipartisanship needed on women’s wealth
The other gender equality gap Australia needs to talk about
Lower pay, lower wealth a woman’s lot in life
Women and Money: Why They Avoid Risk and Lack Confidence When Making Decisions
Think 18.6% is a bad pay gap? Try 52%