It's not super fair, but women need to plan ahead to keep up

Australian women have kicked down just about every barrier to full equality with men. But the superannuation system, which is predicated on working full time for 40 years, leaves women who take time out from the workforce to raise children with less in retirement than men.

As everyone knows, women are also paid less than men. The Association of Superannuation Funds of Australia says almost two-thirds of the pool of retirement savings is owned by men, yet women live longer and have longer retirements to fund.

Employers could be doing more. Rice Warner Actuaries, which late last year released a report on the retirement savings gap, has applied to the Human Rights Commission for an exemption from the Sex Discrimination Act to pay more super to its female employees.

The company, which provides management consulting and actuarial advice to the financial services industry, is seeking to pay its female employees an extra 1.5 percentage points more the 9 per cent superannuation guarantee.

Rice Warner estimated its female employees will live, on average, three years longer than its male employees and that they are likely, on average, to retire earlier.

In its report, Rice Walker said the government could make two changes to superannuation that would help reduce the gender gap. First, the removal of the monthly threshold for superannuation contributions, where employers do not have to pay superannuation to employees earning less than $450, before tax, a calendar month (or to those aged 70 or over).

The other measure that would boost women's retirement savings is including superannuation payments in the government's paid parental leave scheme. The government's scheme is 18 weeks at the minimum wage but with no superannuation guarantee. The Coalition's policy is 26 weeks on full salary, capped at $150,000, and includes superannuation.

The Coalition has said it would remove the 15 per cent contributions tax refund for lower income earners (on up to $37,000 a year), which would have a disproportionate effect on women, costing them up to $500 a year. However, the Coalition said the government would have to scrap the payment anyway, as it could not afford it.

Women working reduced hours to look after children should also consider taking advantage of the co-contribution scheme. Under the scheme, the government provides 50¢ for each dollar of after-tax super contributions up to a maximum after-tax contribution of $1000 (and maximum $500 contribution from the government). That is an immediate investment return of 50 per cent. The benefit is gradually reduced to zero for annual incomes between $31,920 and $46,920.

Salary sacrifice contributions in super, starting at an early age, are the most effective way to help cover any pause in contributions when starting a family.

The Association of Superannuation Funds of Australia says women planning to have a baby should salary sacrifice 1 per cent of their salary into their superannuation as a buffer for when they take time out or cut hours of paid work.