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Ways to close your superannuation gap


Superannuation is the nest egg we all hope to retire on. As women approach retirement, they have far less in their super accounts on average than men do, according to the Association of Superannuation Funds of Australia.

Women age 55 to 59 report super balances of $123,642, far below the average of $237,022 for men of the same age, according to ASFA research. And both those figures are well below the $545,000 super balance that ASFA recommends for an individual to have for a comfortable retirement.

Lower pay, breaks from work leave women with less in super

Many factors explain this gap:

  • Women earn about 16 per cent less salary than men for full-time work, according to Australia’s Workplace Gender Equality Agency
  • Women take time out of the workforce and work part time to care for children and ageing relatives, according to the Australian Securities and Investment Commission.
  • Women often miss out on employer contributions because they do not earn the $450 per month required to receive them.

Women also need to save more for retirement because they live longer than men, according to the Australian securities and Investments Commission. 

Some of these same factors affect men. ASFA found that 220,000 Australian women and 145,000 Australian men are missing out on around $125 million of superannuation contributions each year because of the $450 wage threshold.

But there are many steps women can take to close the super gap, and these strategies may make sense for any couple trying to maximise their retirement savings.

Different types of contributions

Super regulations allow several strategies that partners can implement to boost each other’s super savings. Under the law, a spouse is a husband, wife, de facto or same-sex partner.

One option is to make an after-tax contribution to your spouse’s super.

If your partner’s personal income is $37,000 or less and you contribute at least $3,000, you may be eligible for a tax offset of as much as $540, according to Super Guru.

Tax offsets of smaller amounts remain available as long as your partner’s income is less than $40,000

Another strategy for boosting family savings is to split before-tax, or concessional, super contributions with your spouse.

When you split contributions, you transfer or roll over some of the contributions you made to your super to your spouse’s super.

To split super contributions, start by asking your super fund whether it offers contribution splitting.

The Australian Tax Office also advises that you ask the fund whether it charges a fee for splitting and what forms you need to fill out to apply to split contributions.

Be aware of the rules

Contribution splitting can only be done after the end of a financial year, which is 30 June.

Keep in mind that super contribution caps remain in effect, and couples may pay additional tax for exceeding them.

Consider salary sacrificing

Salary sacrificing is another helpful strategy. In this method, your employer agrees to shift some of your pre-tax salary into a concessional super contribution.

This can reduce your taxes and adds to your retirement savings because the tax rate on concessional contributions is 15 per cent, which is lower than the marginal tax rate for most people.

When you salary sacrifice, your employer is allowed to calculate its super contributions based on your reduced salary, which can result in a reduction in employer contributions, according to ASIC.

To avoid this reduction, ASIC recommends that you ask your employer to use the previous amount, your original gross salary, and get the agreement in writing.

Contribution caps apply to salary sacrificed amounts.

Even small additional contributions can add up to thousands of dollars by the time you retire, thanks to the power of compound interest, and the younger you start, the more time your money has to grow.

For example, a 21-year-old earning $40,000 yearly would have $191,091 in her super if she retired at age 67 and did not make additional contributions to her super, according to this ASIC retirement calculator.

But if the same person salary sacrificed just $50 per month into her super until retirement, she would instead accumulate $216,288.

A raise now means a raise in retirement

Asking for a raise is another good way to boost super because employer super contributions are based on your earnings.

Before you sit down with your boss to discuss a raise, research salary ranges for your role.

Job sites such as Glassdoor can assist with this research.

Collecting case studies of your work and listing concrete reasons why you deserve more remuneration is also wise.

Be clear on the return on an investment that the raise will bring to your employer.

Set some super goals

Researching how much you are likely to need in retirement can motivate you to implement some of these strategies and get a jump start on a comfortable retirement.

Many factors, including how long you are likely to live and what standard of living you hope to attain in retirement, affect how much you need to save.

You may want to consider whether you are likely to take time out of the workforce to care for children or for any other reason and account for that in your plans.

Use this ASIC retirement planner to get started.

ASIC also advises keeping a close eye on super fees.

If you have more than one super account, consolidating them into one plan can help you save duplicate fees and move funds into the lower-cost plan.

Lower fees can boost your super balance significantly over time.

ASIC calculated the savings achieved by a 30-year-old earning $50,000 with $20,000 already in super who shifts funds to lower costs from 2.5 per cent to 1 percent.

By the time this saver retires at age 65, she would have $81,000 more in her super, and her balance would be  $336,000 instead of $255,000.

For more answers to your business finance questions contact the team at Morris Finance today on

(03) 5223 3453.