Super funds pressed to act on women’s retirement gaps

Super funds are being urged to do more to protect older women from financial insecurity as life events widen retirement gaps.

Super funds must take stronger steps to safeguard older women’s economic security in retirement, according to a new report by Impact Economics and Policy for the Super Members Council (SMC). 

The research shows that life events such as separation, informal caregiving, health changes, and family violence can leave women retiring earlier, with lower super balances and higher rates of poverty than men.

These events often strike between the ages of 45 and 65 and can have a lasting effect on retirement income.

Among people aged 60 or older, women are more likely to experience poverty – 25 per cent compared with 21 per cent for men.

Single women and renters face the sharpest disadvantages, with almost 60 per cent of renters in their 60s living in poverty, more than three times the rate of older home owners.

Because superannuation is tied to paid work, gender pay gaps and lower workforce participation directly translate into lower balances. The median super balance for women aged 60–64 is $154,000 compared with $205,000 for men (a gap of 25 per cent).

The report found that while policy reforms have narrowed some disparities, funds themselves must do more.

It highlights four key areas for action: conducting gender assessments of member needs, strengthening protections against financial abuse, providing tailored support for members in vulnerable circumstances, and improving retirement calculators and information tools for those on low incomes or renting.

“Super funds should regularly undertake a gender assessment of members’ needs and outcomes, including whether products and services could be delivered differently to support women in different life situations – such as the often ‘invisible’ life events experienced after the age of 45,” the report stated.

Funds are also urged to take a proactive role in addressing financial abuse to “[i]mprove protections to deter and disrupt financial abuse, such as members being coerced to withdraw money, change their insurance, or alter death benefit nominations”.

“A systematic review of risks and protections – including through product design and customer services – could be led by the super industry, building on reviews for the banking and general insurance industries,” the report stated.

Life events are shown to have major financial consequences, for example, a woman who is forced to retire at 60 rather than 67 due to ill health or care responsibilities would have $71,500 less super and $2,600 less annual retirement income. 

Despite these challenges, the report noted that the maturing superannuation system will lift balances for future generations of women, particularly those who benefit from 12 per cent compulsory super across their working lives.

Yet it warns that without reforms, women may still fall behind men. By the 2040s, there will be 270,000 more divorced women over 65, fewer women will own homes, and more will face caregiving demands.

Impact Economics said that super funds have a unique role to play in cushioning these pressures, alongside government reform.

Tailored advice, empathetic customer service, and more transparent product design are identified as tools that can reposition women “from a state of vulnerability and disadvantage to one of empowerment and economic security.”