Monday, 22 January 2018
- Women are 30 per cent less likely than men to make any superannuation plans for their career break, despite taking 13 per cent more career breaks by choice
- After a career break, women returning to work earn 29 per cent less than their male counterparts
According to Making a Break, new research commissioned by Rest to examine the financial impacts of career breaks on working Australians, just 6 per cent of women participating in the survey sought professional financial advice before taking their career break and less than one in five (16%) women made a superannuation contribution during their break.
Due to this, and lower average earnings, women who have taken a career break are predicted to retire with an average superannuation balance of $283,1412 less than their male counterparts.
The research found that two-thirds of working Australians have taken at least one career break at some stage in their working lives, with an average of 3.5 career breaks overall. Health breaks are the most common type of career break taken by Australians3, particularly for men, who typically took a health-related career break at 44 years old.
“When we think about career breaks, we typically think about parental leave or an extended holiday – it is interesting to see the large proportion of working Aussies forced to take breaks due to their health,” said Mary Atley, General Manager, Brand, Marketing and Communications.
“We know health breaks can come out of the blue, but just as many are planned. Among those who took career breaks, the lack of planning for their superannuation is concerning, with only 10 per cent of respondents consulting a financial advisor prior to their break, and just 21% making voluntary contributions to their super during that time.”
According to the research, the average age women take their career break is 33 years, with maternity leave (50 per cent) the primary reason, followed by leave to care for children (49 per cent), and health reasons (45 per cent).
Interestingly, despite being most likely to take a planned break, women are 30 per cent less likely than their male counterparts to make any retirement income plans when it comes to their break, which may contribute to the $159,590 loss to their retirement balance.
“Awareness, advice and commitment are the keys to ensuring a more financially stable future before, during and after a career break,” added Ms. Atley.
“Our research has exposed that women in particular are feeling the burn when it comes to their superannuation shortfall.
“There are a range of structural issues which contribute to the gender super imbalance, but our research shows that the lack of financial planning ahead of a career break is potentially one of the most important factors. Nearly $160,000 is a significant hit to a woman’s retirement income – a hit which can be lessened with some careful considerations and actions,” said Ms. Atley.
“The fact that women are more likely to take their breaks by choice provides an opportunity to consult an advisor to ensure they’re keeping up their superannuation contributions. A short call with a financial advisor can be an important step in planning for a comfortable retirement”
Upon their return to work, lack of, or ineffective negotiations with employers could continue to contribute to the superannuation gap. Women returning to work after a career break tend to earn 29 per cent less than their male counterparts, an average difference of around $16,000 per year4. In order to return to an income equal to before their career breaks, women had to work 11.8 months, a full month longer than men (10.7 months).
“This highlights a range of contributing factors to the gender superannuation gap. We’re here to help women prepare for any career breaks – whether planned or unplanned and offer Rest members straightforward advice about where to invest their super, how to maximise their super investment or assess their insurance needs at no extra charge,” said Ms. Atley.
2 This is the economically modelled average difference of superannuation balance by the retirement age of 67 between men and women if they took one career break.
3 Career breaks taken that are over three months due to a health-related issue.
4 This is the average difference of income between men and women after taking their career break.
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About Rest Industry Super
Rest is one of Australia’s largest super funds by membership with $50 billion in funds under management as at 31 December 2017 and around 2 million members. Rest was awarded Best Fund Innovation 2017 at the Chant West 2017 Super Funds Awards and also recently won the Rainmaker SelectingSuper Innovation Award 2017 for Millennial Superannuation. *
About Making a Break
The survey was conducted by Lonergan Research between 4 October and 9 October 2017 of 1,030 Australians (both males and females) who have ever taken a career break of at least three months.
*Ratings or awards are only one factor that you should consider when deciding how to invest your super. For more information about our awards, visit rest.com.au/ourawards For further information about the methodology used by Chant West, see www.chantwest.com.au
This information doesn’t take into account your circumstances. So, before acting on it, you should consider whether it is appropriate for you. Before making a decision about your super, please read the relevant Product Disclosure Statement (PDS) available at www.rest.com.au or call 1300 300 778. This information is provided by the issuer, Retail Employees Superannuation Pty Limited, ABN 39 001 987 739 as trustee of Rest (Retail Employees Superannuation Trust ABN 62 653 671 394).