The Commonwealth Bank has lodged its submission to the Senate Standing Economics Committee’s Inquiry into the Economic security for women in retirement.
In the submission, CBA commends the Senate for highlighting the important issue of gender inequity in retirement savings in Australia, and makes a number of policy recommendations to help bridge the gap.
Annabel Spring, Group Executive Wealth Management said: “The Commonwealth Bank Retire Ready Index, released in August 2015, found that single women are significantly less ready for retirement than single men and couples.
“Single women only have 47 per cent of what they need for a comfortable retirement (according to the ASFA Standard and including the Age Pension), compared with 78 per cent for single men and 98 per cent for couples. Women aged between 60 and 64 are even worse off, with only 36 per cent of what they need for a comfortable retirement, compared with 62 per cent for single men of the same age and 84 per cent for couples.
“Having not enjoyed the long-term benefits of compulsory super, single women in their early 60s are well short of the standard for a comfortable retirement. Retirement for many people is a time of great possibility but it is also challenging, particularly for women. Women typically earn less than men, are more likely to be the primary care giver for young children or ageing parents, and retire earlier. All these factors impact on their earning potential and their savings for retirement, and given women continue to have longer life expectancy than men this creates a real barrier to equity for women in retirement.
“The combination of lower financial literacy, lack of confidence in financial capabilities and challenges in the workplace means that women may be prevented from retiring comfortably. We believe that a package of complementary superannuation and non-superannuation reforms is necessary and we look forward to working with the Committee to develop options,” Ms Spring said.
Recent research by Colonial First State Global Asset Management (CFSGAM) found some women (aged 35-49 who are non-advised) have a lesser propensity than men to invest in growth assets such as equities. This differential has been maintained even as equity markets and general investor sentiment recovered after the global financial crisis.
Belinda Allen, CFSGAM Senior Analyst, Economics and Market Research said: “This lower appetite for risk is important when placed in the context of lower super balances and the gender pay gap, which has widened post-GFC, and lower financial literacy, in general, compared to males.
“As women already face retirement with average superannuation balances which are substantially less than their male counterparts, an aversion to higher risk investment strategies holds them back from the opportunity of achieving the higher long term returns available from growth assets.”
The Bank’s recommendations for policy improvements include modifying the concessional contribution caps to allow individuals with interrupted work patterns greater flexibility in applying their caps; introducing consistent tax deductibility for financial advice; extending the Federal Government’s Paid Parental Leave scheme to include superannuation payments; and continuing to implement the National Financial Literacy Strategy.
The submission also points to CBA’s efforts to help bridge the retirement savings gap, such as our parental leave scheme, commitment to financial literacy, and education programs for our people in understanding and meeting women’s unique financial needs.