Is it helpful or is it a setback? The Federal Government’s early access to superannuation scheme is of critical importance to Australia’s most financially vulnerable, particularly women.
The short-term gains that come with being able to access $10,000 or even $20,000 cash this year are obvious. But longer-term there is a real risk that the scheme could widen the gender gap in retirement savings.
Analysis by AMP of its customers’ applications shows women are withdrawing less than men but when they do so it equates to a more sizeable chunk of their super balance.
AMP found that 14% of women are clearing out their entire super balance as a result of the withdrawals compared to 12% of men.
Lara Bourguignon, AMP’s Managing Director, Superannuation, Retirement and Platforms said that AMP’s analysis of early super withdrawals reflects the greater impact COVID-19 is having on female employment.
“70 per cent of workers in the health and social sectors are also women. These are lower income occupations which are at the front of the fight against COVID-19. Cleaners, teachers, child-care and aged care workers are predominantly women.
“We also know that more women have lost their jobs or had their work hours reduced as a result of COVID-19. They are doing it particularly tough at the moment and the early release scheme has been a vitally important initiative to help manage through the crisis.”
Treasury data reveals that as at May 11, of the almost 1.4 million people had accessed up to $10,000 of their superannuation and more than 463,000 of them were under the age of 30.
The March quarter Financy Women’s Index warned that the gender gap in superannuation is likely to face its first setback in many years if COVID-19 has a sustained impact on the employment trends of women in what would be a major setback for the financial progress of women.
The ABS latest data shows that women retire with 31% less in their retirement savings than men from the 2017-18 financial year.
The median superannuation account balance reported by the ABS for the 2017-18 financial year shows that the average women had only $45,000 in her superannuation account while the average man had $65,000 as of the 2017-18 financial year.
In the two years to June 2018, women saw their account balances grow by 11% compared to 5% for men helped by increased contributions and greater female work participation.
When you look at the mean superannuation balance, the average woman had $121,000 in retirement savings compared to $168,500 for the average man in the 2017-18 financial year. This reflects 15% growth for women and 6% for men.
However, these improved growth rates in contributions could decline if we see a sustained and greater impact from COVID-19 on female employment and wages relative to men.
It’s important to note that about a quarter of women don’t have any superannuation at all compared to about a fifth of men (23.5% versus 20.5%), according to ABS Gender Indicators data for the 2017–18 financial year.
Young women and those over 55 years are more likely than any other age group to have no superannuation at all.
About half of 15 to 24 years have no superannuation at all and there is very little difference between the genders with 49.4% women and 50.3% men.
Of women aged 55-64-year-old, 22.4% have no super compared to 16.3% men.
Before the onset of COVID-19, modelling provided by Deloitte Access Economics forecast that the gender gap in superannuation would have narrowed to 29% in 2019 based on the compound annual growth rate (CAGR) over the past decade.
