Introduction
Good morning everyone and thank you for the invitation to join you today.
I am genuinely excited to be speaking at a Women in Super event because your cause is my cause, and something I’m passionate about.
And, of course, were it not for COVID-19, I would be joining you in person.
We’ve all been touched by this pandemic through the public health and economic responses but also in very personal ways with lockdowns, job losses and reduced working hours, impacts on education, working from home or, at its worst, through illness or the loss of loved ones.
I hope you all remain safe and well as we manage our way to the other side of this crisis.
Economic security in retirement
It’s terrific that Women in Super and this event carves a space in the national narrative to talk about the drivers of economic security for women in retirement.
I can assure you that the Government – and I personally – am acutely aware of the superannuation gap for women.
We know the superannuation system was not designed specifically for women. It was designed for people who:
- enter the workforce young, after finishing school or university;
- never take a career break; and
- work for 40 years in the same occupation or industry.
The system designed in 1992 does not account for a number of factors that contribute directly to the superannuation savings gap, namely the gender pay gap, time out of the workforce due to caring responsibilities and the decision of many to work part-time.
I know from my own experience. I took a number of years off from work to have children. I’ve had career breaks and caring responsibilities. I’ve worked part-time. And, of course, I worked in financial services – the industry with one of the biggest gender pay gaps.
I’m pleased to be able to say that the Government has legislated a number of measures to directly assist women to increase their superannuation savings, by increasing flexibility and recognising changing work patterns.
These include:
- Introducing the Low Income Superannuation Tax Offset (LISTO), which has benefitted around 1.9 million women by over $500 million since 1 July 2017.
- We’ve made it easier for those without access to salary sacrifice arrangements to make additional concessional contributions
- More people can claim a tax offset – of up to $540 – for spousal superannuation contributions since we lifted the recipients’ income threshold to $40,000.
- And those with balances below $500,000 can ‘catch up’ on their retirement savings by accessing unused portions of their concessional contributions. This is particularly important for women who have taken time out of the workforce, and is, I believe, one of the most significant, potent, and yet unrecognised and underutilised policy changes in super for years.
In addition, we’ve made changes to improve the efficiency of the system so that while people are taking career breaks, their superannuation savings are not eroded by inappropriate fees or unnecessary insurance premiums.
But I’m also conscious that superannuation balances are not the only indicator of economic security of retirement.
There are many drivers to economic security in our later years– including education, housing, financial literacy, physical safety, savings outside of superannuation… the list goes on. It’s time to expand the conversation.
Early access to super
Speaking of economic security – the impacts of the Coronavirus pandemic have been testing households and businesses across the country.
The Government’s decision in response to allow eligible individuals to access their superannuation early has resulted in endless chatter amongst industry, and sadly, a fair bit of mud-slinging and political point scoring.
But allowing two withdrawals of up to $10,000 each in the midst of a global pandemic was needed as evidenced by 2.6 million individual applicants who have taken advantage of the scheme to support themselves at this challenging time.
Many people have found themselves asking for help for the first time in their lives. Just last week, quite late one night, I had a call at home from a mother from my child’s school – I hardly know her. But she was crying. Her marriage had ended, her once successful event management business has folded, her year 11 daughter is doing well at school in the circumstances and is aiming to do science after she finishes next year, but the fees are due. Could I just maybe let her know - was the government thinking about a third tranche of super? I had to say - no. That kind of distress – that private despair - is gut-wrenching.
From the everyday Australians who call my office – those not in Canberra bubble – they are overwhelmingly grateful. I speak particularly of my constituents in Victoria, for whom the restrictions have taken an extraordinary toll on their financial and emotional wellbeing. Access to their superannuation has been a lifeline, allowing so many to get through this crisis with their dignity intact.
So far a lot of the conversation has focused on the headline numbers – the $33.3 billion that has been approved for release. It’s easy to forget that those billions are made up of individual stories of personal hardship.
Yet, choosing to access your super early does come at a cost. We all know that. But those doing it tough — those who have mortgages to pay, bills to pay, school fees to pay — need help now.
According to the ABS, 57 per cent of those who have accessed their super have used or planned to use it to pay household bills, mortgages, rent and other debts while 36 per cent are adding it or planning to add it to their savings.1
As Assistant Minister for Superannuation, I am proud of the early release scheme.
I am proud that the Government implemented this initiative to help Australians in their hour of need. That Australians have super to call on at this time is a strength of our compulsory system. Allowing temporary, flexible access to super shows the system can also help Australians during this crisis.
I’m proud of the regulators and agencies, who worked swiftly and collaboratively to create a process with simplicity and integrity, and I’m proud of the many CEO’s and chairs of super funds themselves – from all parts of the system - who approached me directly and said – how can we help? How can we make this work? We’re here to work with you.
The ATO has conducted a thorough examination of eligibility and found that, even on the first sweep of the ATO’s data matching processes, the overwhelming majority of applicants met the scheme’s eligibility criteria.
COVID-19 is testing all of us – our patience, our resilience, our most basic assumptions of what the future will hold - but our super system is something we should all be proud of. It has helped millions through this crisis, it will continue on its path to fund our retirements – and, like all of us - it will weather this storm.
Financial literacy
If there is a silver lining to come out of the COVID 19 crisis, it is perhaps that Australians are taking a deep dive into their personal finances and shining a long-overdue spotlight on their superannuation.
People who may have never turned their mind to super before are now asking – where has that nearly one dollar in ten of everything I earn gone? Who is looking after it? How much has it grown? What is the effect if I choose to access it now? How can I make up the difference before I retire? In an industry that has for years bemoaned the extent of disengagement of its members, these questions are good.
On a daily basis, I speak with the CEOs of super funds – a number of whom are also speaking to this conference - who tell me their members are more engaged than ever before.
It’s good news that Australians are putting their hands up, seeking out information and considering their financial decisions, but there’s much more to be done because sadly, financial literacy is not one of Australia’s strong suits.
And financial literacy among women is particularly poor.
In 2019, the University of Melbourne’s long-running HILDA study focussed on financial literacy. Participants were asked about basic financial concepts such as inflation, calculating interest and portfolio diversification. The results were damning – especially from a gender perspective.
Fewer than half could answer all five basic questions correctly. And worse, there was a distinct gender gap. Although fifty per cent of men managed to score a perfect five, only thirty-five percent of women did the same.
In 2017 ASIC’s Australian Financial Attitudes and Behaviours Tracker reported that women found dealing with money more stressful and overwhelming than men did.
And in 2018 - research conducted by the CBA found that only 1/3rd of women learned about the importance of long-term investing when they were younger.
This year - the RBA surveyed high school economics students, asking them which topics they were more interested in. The girls said ‘identifying problems’, their male colleagues said the ‘share market’.
And within super – last year’s ASFA study found that 34% of members rarely or NEVER opened their communications from super funds. They found them too complicated, or simply couldn’t be bothered.
Women trail men in financial literacy and yet more women than ever are financially independent of them. There have never been more women choosing not to marry, leaving relationships or partnering in same-sex relationships. We must do more to boost women’s financial literacy.
And I call on the industry to be a leader in the solution. Many of you, I know, emphasise the roll you play in workplace education of your funds – and some of that is good but is it enough? There is more that can be done and with exciting new technology, innovative ideas and renewed engagement, now is the time for a step change. If you are genuine about your desire for gender equity in super – and I believe you are -it is incumbent on the superannuation industry to do more to support the financial literacy of Australian women.
Investing in the financial education of Australian women is an investment in not only in the industry’s future but also in our society’s prosperity – it is an investment in our daughters and their futures.
And that’s a good investment by anyone’s measure.
2018 Women’s Economic Security Statement
Finally, let me give you an update on the Government’s Women’s Economic Security Statement. As the Minister for Women as well as the Foreign Minister, my good friend Marise Payne is leading the charge. She will be ably supported by others in this endeavour, including Minister Anne Ruston as Minister for Social Services, Minister Michaelia Cash as Minister for Employment, Skills, Small and Family Business, Minister Karen Andrews as Minister for Industry, Science and Technology, and by me. The Statement will be refreshed later this year and will play an important part in supporting women’s workforce participation as we recover from COVID-19.
There are two measures from the last Statement that we’re still working on.
You will recall that, because of difficulties in identifying the superannuation assets of parties in family law proceedings, the Government committed to developing an electronic information sharing mechanism between the ATO and the Family Law Courts. This will reduce the need for costly and time consuming information gathering exercises and ultimately ensure more equitable superannuation splitting outcomes.
We’ve been working with the Family Court on the design of this mechanism to ensure this measure achieves its intended purpose. The vagaries of our federal system has meant this has not been as simple as we would like, but be assured that our commitment has not waivered.
We also committed to creating a new a new ground for early release of super for victims of family and domestic violence. Since the Statement was released, we’ve published a consultation paper to develop the criteria for this ground. It’s important that we hear from the experts and get the parameters right for this change.
This is an important policy. Superannuation is a unique asset – with safeguards and protections that mean – in most circumstances - it is virtually untouchable by a violent third party who may seek control over all other financial assets. But it is not a policy we rush into without consideration of consequences.
Conclusion
On that note, I would like to thank you all again for the opportunity to record a message for your conference. It’s truly a pleasure to be able to speak on a topic that I’m so passionate about.
When I look into the eyes of my 14 year old daughter I have so many hopes and dreams for her future. She’s unlikely to fulfil all of them – after all they are my dreams for her, not hers. But most of all I want her to feel strong, I want her to be capable, and want her to feel that she alone is in control of her destiny and she has the knowledge and skills to make the most of the opportunities she has, no matter what life throws at her.
The work Women in Super does is so critical, and the conversations you generate are more important than ever. Coronavirus has turned this country on its head – but please be assured that we have not lost sight of the important issues.
Women’s economic security makes for a better society, a stronger country and will remain a priority of the Morrison Government, no matter what life throws at us.
I wish you all the best for the rest of your conference.