Quantifying Australia’s Gender Superannuation Gap

Abstract

This paper quantifies the factors contributing to Australia’s gender gap in superannuation balances. Around 60 per cent of the gap can be attributed to the prior stock of superannuation, for respondents who had superannuation balances in both 2014 and 2018 in the Household Income and Labour Dynamics in Australia Survey. This is partly due to the accumulation of the prior gap with investment returns. Financial literacy and risk aversion explain around 7 per cent of the gap in total, such as through impacts on subsequent investment returns. Work patterns and wage rates affect contributions and explain approximately 30 per cent of the superannuation gap in total.

Retail Investor Trading Intentions: New Evidence from Australia*

“…Third, the findings complement existing research on the broader financial beliefs of Australians, including research on investor psychology (Clark‐Murphy & Soutar, 2004, 2005), the behaviour of retail investors during COVID (Chiah et al., 2022), financial literacy (Beal & Delpachitra, 2003; Worthington, 2006; Preston & Wright, 2023) and perceptions regarding superannuation and pensions (Worthington, 2008; Peng et al., 2020; Best & Saba, 2021; Hammerle et al., 2021).…”

“…In particular, females and lower‐income individuals exhibit an aversion to trading that has broader ramifications for their stock market participation. Relatedly, Best and Saba (2021) present evidence from the Household Income and Labour Dynamics in Australia (HILDA) survey indicating that gender differences in risk aversion (with Australian females being more risk averse than males) are also a contributing factor to the gender superannuation gap in Australia.…”

Gender, Financial Literacy and Pension Savings*

“…The extensive literature on savings behaviour also suggests that decisions about pension savings may be affected by factors such as framing effects, the design of the pension system and default settings (Card & Ransom, 2011; Dobrescu et al ., 2018; Hastings & Mitchell, 2020; Clark & Pelletier, 2022), interest in pension affairs (Bateman et al ., 2014; Debets et al ., 2022), risk, time preferences and patience (Charness & Gneezy, 2012; Arrondel et al ., 2013; Choi et al ., 2014; Fernández‐López et al ., 2015; Hastings & Mitchell, 2020; Best & Saba, 2021), locus of control (Cobb‐Clark et al ., 2016), confidence levels (Angrisani & Casanova, 2021); household decision‐making roles (Bucher‐Koenen et al ., 2017), cognitive and decision‐making abilities (Bateman et al ., 2012; Choi et al ., 2014), financial literacy (Lusardi & Mitchell, 2007, 2011; Behrman et al ., 2012; Agnew et al ., 2013; Brown & Graf, 2013; Boisclair et al ., 2017; Dahlquist et al ., 2017; Hastings & Mitchell, 2020) and trust (e.g. in financial institutions) (Burke & Hung, 2021).…”

“…They also show that while a return to full‐time paid work in later life may have a positive effect on savings, the ‘…damage in terms of foregone wages and associated retirement savings in their own account has already been done, and women's balances are much lower’ (p. 166). Best and Saba (2021) also emphasise the enduring effect of the gender gap in pension savings over the accumulation phase.…”

Co‐contribution Opportunities for Superannuation Funds and Policy‐Makers

“…Inequality in support through the retirement income system is also evident with respect to other factors beyond income, such as assets and gender. The gender superannuation gap is likely to be persistent without considerable policy intervention, given that past inequality accumulates with future investment returns (Best and Saba 2021).…”