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Submission to The Senate Economic References Committee Economic Security for Women in Retirement Inquiry into October, 2015 1 Economic security for women in retirementSubmission 42 The shocking reality is that, because of their cumulative experiences and the design of our retirement income system, women are more likely to be accumulating poverty during their lives, than accumulating wealth.
Elizabeth Broderick, Sex Discrimination Commissioner and Commissioner Responsible for Age Discrimination, 2009 Introduction The Queensland Nurses’ Union (QNU) thanks the Economic References Committee (the Committee) for the opportunity to make a submission to the inquiry into the economic security of women in retirement.

Nursing and midwifery is the largest occupational group in Queensland Health (QH) and one of the largest across the Queensland government.
The QNU is the principal health union in Queensland covering all categories of workers that make up the nursing workforce including registered nurses (RN), registered midwives, enrolled nurses (EN) and assistants in nursing (AIN) who are employed in the public, private and not-for-profit health sectors including aged care.
Our more than 53,000 members work across a variety of settings from single person operations to large health and non-health institutions, and in a full range of classifications from entry level trainees to senior management.

The vast majority of nurses in Queensland are members of the QNU.

As a highly feminised and ageing workforce, economic security in retirement is a significant issue for nursing and midwifery.
Our submission puts forward several recommendations we believe may work towards addressing the gender retirement income gap.

Women and Superannuation Women face unique challenges when it comes to retirement savings.

Lower pay, time out of the workforce to raise children, caring for elders, running a single-parent household, illness and divorce are some of the many hurdles they often face throughout their lives.

However, despite these factors, women do not form a ‘niche’ market.
They are a powerful consumer group that makes significant contributions to the nation’s economic and social wealth.

Women’s in the assumptions underpinning superannuation where the key feature of its design is protracted, continuous periods of employment over which employers and workers make contributions.

It is a grand design, but one ultimately failing women and those with interrupted employment.
long term economic disadvantage lies 2 Economic security for women in retirementSubmission 42 Women’s disadvantage is exacerbated by the gender wages gap1 currently standing at 18.8% (Australian Bureau of Statistics, 2014a), the fact they live longer than men (Australian Bureau of Statistics, 2014b) and other structural factors that effectively reduce their lifetime earnings and superannuation contributions.
The Report of the Financial System Inquiry (2014) identified significant scope for the superannuation system to meet the needs of superannuation fund members better and provide broader benefits to the financial system and the economy.

The Inquiry recommended action should be taken to set clear objectives for the superannuation system that have broad community support and which align policy settings, industry initiatives and community expectations.
This could address some of the inequities of the current system.

Structural Reform Breaking down structural barriers women face in their working and social lives will need to take into account their patterns of work, the gender pay gap, caring responsibilities, employment opportunities (for example large numbers of women are employed in low paying industries) and longevity.

All of these factors mitigate against women’s long term earning capacity.
Low Income Superannuation Contribution (LISC) In the 2014-15 Federal Budget the Government reaffirmed its intention to repeal the LISC payment, a government superannuation contribution of up to $500 per year on behalf of low income earners.

This is particularly detrimental for women with around 2.1 million affected.

A significant percentage of these are mothers working part-time while looking after young children.
This is the time when an additional $500 a year superannuation contribution would be of most benefit for women to build savings for their retirement.

The LISC was an important initiative designed to address the superannuation savings of low- income Australians, particularly women who are more likely to be in part-time work and earning below the tax free threshold (Australian Council of Social Service, 2013).
The repeal of the LISC left those earning less than $37,000 per year as the only Australian wage and salary earners who do not receive a concessional treatment of their superannuation contributions.

The majority of these are women.

1 The gender wages gap is the difference between women’s and men’s average weekly full-time equivalent earnings, expressed as a percentage of men’s earnings.
Based on 2014 data, this means on average, a man working full-time earns $1,587.40 per week whereas a woman working full-time earns $1289.30 per week.

That equates to difference of $298.10 per week (ABS, 2014a; Workplace Gender Equality Agency, 2015).

3 Economic security for women in retirementSubmission 42 Super Guarantee (SG) The SG refers to the compulsory superannuation contributions made by employers on behalf of their employees.
Regardless of the size of the business, employers must contribute the equivalent of 9.5% of an employee’s salary for the 2015/2016 year, as was the case for the 2014/2015 year.

The SG will remain at 9.5% for another 6 years, increasing to 10% from July 2021, and eventually increasing to 12% from July 2025.

This program was designed to reduce dependence on the Age Pension by increasing retirement savings.
Combined with the abolition of the LISC, the stalled rate for increases to the SG will further restrain women’s super incomes.

It is generally the case that in order to be entitled to SG payments from an employer the employee must be aged 18 years or older and be paid a minimum of $450 (before tax) in a month.
This earnings threshold particularly disadvantages those on low incomes (including those working irregular and or shorter hours due to caring responsibilities) and further entrenches the low superannuation balances of women.

The QNU has long argued for the abolition of this earnings threshold as we believe it would go some way to closing the gender based superannuation gap.
Superannuation Tax Concessions The Inquiry into Australia’s Financial System (Commonwealth of Australia, 2014, p. 90) found tax concessions in the superannuation system are not well targeted at improving retirement incomes.

This has a number of consequences.


It increases the cost of the superannuation system to taxpayers; increases distortions due to higher levels of taxation elsewhere in the economy and due to the differences in the way other savings vehicles are taxed; and contributes to the broader problem of policy instability, which imposes unnecessary costs on superannuation funds and their members and undermines long-term confidence in the system (Commonwealth of Australia, 2014).
We note the government has floated the idea of lifting the $30,000 tax cap for concessional super contributions for women returning to work.

Although this may be of advantage to high income earners, it is more frequently the case that our members do not earn enough to take advantage of this initiative.

When returning from maternity leave their funds are most heavily geared towards meeting child care costs and paying the mortgage and other bills.
They have little capacity to make extra superannuation contributions.

Tax concessions disproportionately flow to men rather than women because men make up the majority of high income earners.

The top 10% receive 35% of tax concessions; the lowest 70% receive 29% of tax concessions (Industry Super Australia, 2015).

4 Economic security for women in retirementSubmission 42 Superannuation Co-contribution scheme This scheme relies on a voluntary superannuation contribution that the federal government matches.
Only 14 % of people who are eligible to use the scheme do so (Australian Tax Office, 2013).

Users of the scheme peak at age 50-54, but by then it is too late to dramatically improve retirement incomes (Rothman & Tellis, 2008).

Policy development Basu & Drew (2009) argue there is a compelling case for designing a gender-specific superannuation system with higher contribution rates for women.
However, this presents a significant challenge to policymakers considering many women have little labour market flexibility to cope with higher contributions.

Basu & Drew (2009, p.186) contend instituting a more aggressive default investment strategy can be more problematic given women are believed to be fairly risk averse to increased exposure to equities.
They also recognise that such a policy could nullify women’s inferior performance in one market (labour) partly by increasing their exposure to the performance risk in another market (investment).

We see there is a need to provide a gender analysis of all proposed tax/fiscal/policy changes as effects may differ between men and women.
Women currently moving into retirement Given the demographics of the nursing and midwifery workforce, we believe there is a need to focus research and effort on those women who will be retiring in the next 5-10 years or who are currently in retirement i.e.

those women who either did not work, worked but had no access to super or who were in the super system for a short period of their working lives and the specific issues they face in retirement.
Carer Credits In our view, an area of superannuation and taxation reform that needs further investigation are caring credit systems in use in many countries with social insurance-based public pension schemes such as the UK, Sweden, Canada, Finland and Germany.

‘Carer credits’ are a method of explicitly recognising in a country’s pension system years spent providing unpaid care for a child or a family member with a disability, long term illness or frailty due to old age.
In most instances, the state credits an individual’s (notional) pension account while they are out of the workforce providing care.

The value of the credits is sometimes linked to the earnings of the individual prior to leaving the workforce but in many cases is based on a proportion of a ‘fictional’ salary of the minimum wage or average earnings during periods of workforce absence (Australian Human Rights Commission, 2013).
5 Economic security for women in retirementSubmission 42 Countries such as Sweden, France and Poland are beginning to include carer credits in their private or occupational pension schemes.

In these cases, the state either contributes to a person’s private pension account while they are out of work after the birth of a child or takes over the employer contribution during certain periods of workforce absence (Broderick, 2014).
International literature (Ginn, 2004; Vlachantoni, 2008; Jankowski, 2011) indicates these schemes are effective in maintaining women’s attachment to the workforce while continuing to provide care.

This helps to alleviate poverty in the present (through additional income) and in the future (through improving retirement income).
We support the Australian Human Rights Commission’s (2013) recommendation that the Productivity Commission conduct an inquiry into mechanisms for valuing unpaid caring work including modelling of a caring credits scheme.

Education Financial Investment institutions and the regulator, the Australian Securities and Commission, (2015) recognise the need for women to start saving early and offer online advice.

However, education needs to start much earlier.


Both girls and boys would benefit from information about managing finances, including superannuation, during high school.
Recommendations The QNU recommends the federal government:  Sets clear objectives and guiding principles for the superannuation system, recognising the particular difficulties women and low income earners face in contributing to and benefiting from the scheme;  Reports publicly on the major indicators affecting women’s superannuation and any progress towards achieving parity with men;  Retains and improves the LISC;  Restructures tax concessions so they target low-income earners and women;  Pays Super contributions as part of the federal government’s paid parental leave scheme; 6 Economic security for women in retirementSubmission 42  Continues to invest in quality childcare so women can maintain their income while raising their families;  Undertakes research that measures progress on women’s economic security in retirement;  Provides a gender analysis of all proposed tax/fiscal/policy changes;   Increases the compulsory employer contribution rate from 9% to 12% as soon as possible; Investigates the introduction of ‘carer credits’ to top up superannuation for those with major caring responsibilities;  Maintains the age pension to reflect relativities with average earnings and work- related benefits;  Removes the $450 per month minimum earning requirement for payment of employer superannuation contributions;  Provides access to free, long term, financial advice to women to assist them navigate events that may affect income such as childbirth, elder care, redundancy, serious illness and divorce;  Provides funding for education on financial management within secondary schools for girls and boys to understand and benefit from long term savings plans.
Conclusion The QNU welcomes this inquiry and the possibility to address some of the structural and social impediments that are currently confining many women to low incomes during their working lives and even lower incomes in retirement.

These barriers can be overcome if governments make a sincere commitment to social and wage justice and structure the superannuation scheme so that it accommodates women’s work and family responsibilities.
Until women’s rights to economic security are realised and they are engaged as fully and effectively as they can in the workforce, then over 50% of the nation’s population will not be able to contribute to their capacity - and that is a massive productivity loss.

7 Economic security for women in retirementSubmission 42 References Australian Bureau of Statistics (2014a) Average Weekly Full-Time Earnings Cat no.

6302.0.
6302.0.

Australian Bureau of Statistics (2014b) Life Expectancy at Birth based on Deaths Australia cat no.

3302 retrieved from http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4125.0main+features6155Aug%20 2015 Australian Council of Social Service (2013) Submission to the Inquiry into The Minerals Resource Rent Tax Repeal and Other Measures Bill 2013.
Australian Human Rights Commission (2013) Investing in care: Recognising and valuing those who care, Volume 1 Research Report, Australian Human Rights Commission, Sydney.

Australian Securities and Investment Commission (2015) retrieved from https://www.moneysmart.gov.au/life-events-and-you/women/superannuation-and- women Australian Taxation Office (2013) Annual Report 2012-13.

Basu, A.

& Drew, M. (2009) ‘The Case for Gender-Sensitive Superannuation Plan Design’ Australian Economic Review, 42, 2, pp.
177-189.
Broderick, E. (2009) ‘Accumulating poverty: Women’s experiences of inequality over the lifecycle’, Speech to the Sydney Institute, 15 September retrieved from https://www.humanrights.gov.au/news/speeches/accumulating-poverty-women-s- experiences-inequality-over-lifecycle-2009 Broderick, E. (2014) Women’s economic security and unpaid care work, World Bank/Australian Government Side Event, Commission on the Status of Women, 58th Session, 11 March retrieved from https://www.humanrights.gov.au/news/speeches/recognising-and-valuing-unpaid- care Commonwealth of Australia (2014) Financial System Inquiry Final Report.
Ginn, J.

(2004) ‘European Pension Privatisation: Taking Account of Gender’ (2004) Social Policy and Society, 3 (2) pp.

123-134.

8 Economic security for women in retirementSubmission 42 Industry Super Australia (2015) ‘The super system has to stop compounding the gender pay gap’ retrieved from http://www.industrysuperaustralia.com/media/opinions/the- super-system-has-to-stop-compounding-the-gender-pay-gap/ Jankowski, J.
(2011) ‘Caregiver Credits in France, Germany and Sweden: Lessons for the United States’, Social Security Bulletin, 71 (4) pp.

61-76.

Rothman, G. & Tellis, D. (2008) Projecting the Distributions of Superannuation Flows and Assets, Retirement & Intergenerational Modelling & Analysis Unit, Department of the Treasury.

Vlachantoni, A.

(2008) Care credits in European pension systems, Centre for Research on Ageing, Discussion Paper 0801.

Workplace Gender Equality Agency (2015) What is the Gender pay Gap?
Retrieved from https://www.wgea.gov.au/addressing-pay-equity/what-gender-pay-gap .

9 Economic security for women in retirementSubmission 42