Few people would argue there isn’t a problem when it comes to the disparity between men’s and women’s superannuation balances.
Women in Super estimates that women retire with 47 per cent less super than men, while a recent analysis from REST Industry Super showed that career breaks, including maternity leave, cost the average Australian woman $160,000 in retirement savings over her lifetime.
It’s a problem that is now gaining more attention in the financial advice community, but advisers
say the industry still needs to do more to tailor its services to women.
For Sydney-based financial adviser Deborah Kent, that starts with the make-up of the advice industry itself.
“We need to encourage more women to be advisers because we see that women tend to go to other women for advice,” Kent says. “There has been a lot of research done on the different ways women react to advice than men. Women want someone who is really going to listen to them. Most women come to me, they’ve already been to see someone else and they say, ‘I didn’t actually understand what they were saying because they weren’t listening to what I needed.’
Kent, who is speaking at the Professional Planner Post Retirement Conference on March 21 in Sydney, admits there is no silver bullet for the industry but argues that, while there are measures the government could introduce that would help close the gap, the key now is to get more women to seek advice.
“Everyone I have in here, I make sure I always talk to the wife, to make sure they understand it just as well as the husband,” especially, she says, if the wife is disinclined to step into what she views as the husband’s territory.
For some advisers, tips in the accumulation phase include using provisions to split spousal super so the stay-at-home parent has some money going into their own balance while on leave, and using personal deductible contributions for casual workers, which includes many women.
“These are the things that need to be explored, because everyone at the moment is pussyfooting around the real issues,” Sunsuper head of advice and distribution, Anne Fuchs, says. “Unless we do something quite dramatic and brave, the trajectory doesn’t change.”
Post-retirement, engagement automatically increases across both male and female members, but that’s not to say the industry can’t provide tailored responses for women in that phase. Products such as annuities could provide a solution that ultimately benefits women (because of their longer average lifespan), says adviser Patricia Pascuzzo, although she recognises the market for those types of products in Australia is underdeveloped.
“Whereas in the accumulation phase members are provided with a default, there’s no default at the other end,” Pascuzzo says. “Maybe it should be a softer type of default but there should and can be more guidance and so far the regulatory framework doesn’t necessarily accommodate trustees providing members with nudging to help them select retirement income products suitable to their needs.”
Running errands at her local pharmacy recently, Helena Gibson came face to face with the reality of how most women in Australia engage with the issue of superannuation. Gibson, who is head of public policy and technical services at BT Financial Group, says she was compelled to step in and help after overhearing a pharmacy staff member on the phone to what she correctly presumed was her super fund.
“She got off the phone visibly distressed,” Gibson recalls. “I asked what was wrong and she apologised for being upset and told me she thought her super fund was trying to rip her off by reducing the level of insurance cover without telling her.”
“They had been telling her it was her responsibility to have read all the information in the product disclosure statement but she kept saying, ‘Who am I, I’m not a lawyer, how do I know what I’m meant to read and how this is going to affect me?’”
The incident brought home to Gibson just how far her industry still has to go to help women understand how their super works and feel engaged and empowered enough to deal with their long-term savings.
Gibson and others in the industry agree there are policy ideas in the pipeline that should help improve the structural issues exacerbating current discrepancies. Changing taxation to a family or spousal level, introducing lifetime contribution caps rather than annual caps, paying the super guarantee on parental leave, and changing when and how super has to be paid to casual workers.
“But it tends to take a back seat because we have so many competing priorities at the moment and one of those is how to get women more engaged and more independent of their spouse [financially],” Gibson says.
Chair of Women in Super and CareSuper, Cate Wood, says she sees super funds working harder than ever to make their communication with members more targeted and relevant to individual circumstances, whether they’re segmenting by gender, account balance, age, income or spending behaviour.
Financial planners, banks and funds are launching programs and special forums specifically for women, such as VicSuper’s five-week Super Woman Money Program, which has had 12,000 participants in about three years. Asked whether she thinks the tilt towards better communication is working as intended, Wood says interest in super is increasing, partly because the account sizes are becoming more significant but also because of increased public commentary around it – particularly the gender gap.
She warns that the industry must exercise some care that it doesn’t make it all sound so impossible [to close the gap] that you stop people taking action and actually deter them from getting involved.
“There have been times when the line is, ‘You need a million dollars or you’re done,’” Wood says. “We’re constantly going back out saying you don’t need a million dollars to make a big difference to your income in retirement through adding super to the age pension…Even by adding $70,000, you can make a difference topping up your age pension.”
A fine line
She also says there is a fine line to tread in educating and empowering women without making them feel guilty, or that they have failed, or that they’re not smart enough because they don’t understand the system.
As one fund with a majority of women members found out last year, it can be tricky. In late 2017, it was revealed in the media that a comedienne’s Melbourne Fringe Festival show lampooning women and superannuation had been prompted by some well-intentioned but misguided tips from VicSuper about how women could take responsibility for improving their super situation.
The show’s creator, Elizabeth Davie, said at the time that the tips made her feel like it was her attitude that was stopping her from having a bigger super balance.
What the incident reveals is that the industry, including funds and advisers, should be collaborating to share information about how to maximise women’s engagement at both the accumulation and post-retirement stages.
Sara Daymond, executive manager of marketing, insights and experience at VicSuper, says the fund has done an enormous amount of work on how to help women feel more comfortable and in control of their super. The Super Woman Money Program was developed as a direct response to the findings.
“In talking to women, often they’d say, ‘We didn’t even want to ring the contact centre because we didn’t want to show that we didn’t have the knowledge [about their own super],” Daymond says. “What we’ve found is that women, in particular, like communities; they like to feel supported and also learn from each other. So what’s been particularly successful is online forums where they can share information, or [them] coming in and talking with various financial experts we bring in and learning from each other.”
“There was an enormous sense of relief we found with women when they came in and recognised that they weren’t the only one.”