The Scale of the Problem
Australian women retire with an average superannuation balance of approximately $157,000 compared to $270,000 for men - a gap of around 47%. For many women, this means retiring into poverty or near-poverty, relying primarily on the Age Pension. The gap is structural, not personal - it reflects how super interacts with the realities of women's working lives.
- Average gap at retirement: Women hold ~$157,000 in super vs ~$270,000 for men - a $113,000 shortfall on average (ASFA data)
- Lifetime earnings gap: Women earn approximately 13.3% less than men (WGEA gender pay gap) - less salary means less SG at 11.5%
- Career interruptions: Average career break for primary caregivers is 5-7 years - during this time super contributions stop entirely
- Part-time work: Women make up 68% of part-time workers - SG applies to all earnings but part-time salaries generate far less super
- Superannuation SG threshold removed: From July 2022, the $450/month minimum threshold was removed - workers earning small amounts now receive SG regardless
- Unpaid caring work: Caring for children, elderly parents or disabled family members is economically invisible - no super is generated from unpaid work
- Investment risk: On average women take lower-risk investment options - this reduces long-term returns. A 1% annual return difference over 30 years on $100,000 initial balance is ~$134,000
- Divorce impact: Relationship breakdowns split super balances. Women often receive a smaller share of total household super accumulated during marriage
Spouse Superannuation Contributions
If your partner has a lower super balance, the higher-earning spouse can make after-tax contributions to the lower-earning spouse's super. The tax offset incentivises this directly.
- Spouse contribution tax offset: Contribute up to $3,000 to your spouse's super and receive an 18% tax offset - maximum offset $540 if spouse earns under $37,000
- Tapering: The offset reduces for spouse income between $37,000 and $40,000 and disappears above $40,000
- No offset needed for strategy: Even without the offset, contributing to the lower-earning spouse's super builds their balance and may reduce household tax in pension phase
- Both must be under 75: Both the contributing and receiving spouse must be under age 75 for spouse contributions
- Not counted against receiving spouse's caps: Spouse contributions count against the non-concessional contribution cap ($120,000 per year in 2025-26) of the receiving spouse
- Contribution splitting alternative: Rather than after-tax contributions, the higher earner can split up to 85% of their concessional (pre-tax) contributions to the spouse's fund - useful when the contributing spouse wants to maintain their own NCC cap
- Seek advice: Contribution splitting is irrevocable and has nuances - get advice before implementing for large amounts
Low Income Superannuation Tax Offset (LISTO)
The Low Income Superannuation Tax Offset is a government payment designed to ensure low-income earners don't pay more tax on super contributions than they would on their regular income.
- Who qualifies: Individuals with adjusted taxable income up to $37,000 who have had concessional (employer or salary sacrifice) contributions made to their fund
- How much: 15% of total concessional contributions for the year, capped at $500
- How it's paid: Paid directly by the ATO into the individual's super fund - no action required
- Effective tax rate on contributions: Someone earning $30,000 pays 0% marginal tax but super is taxed at 15% contributions tax. LISTO refunds up to $500 of that tax - bringing effective rate to near zero
- Automatic: The ATO calculates and pays LISTO automatically based on tax return and super fund reporting
- Particularly valuable during career breaks: If returning to part-time work after a career break, LISTO may apply - check eligibility
Government Co-Contribution
The superannuation co-contribution is a government matching scheme for after-tax (non-concessional) contributions made by low-to-middle income earners. It directly rewards those who contribute their own money to super.
- Maximum co-contribution: $500 - the government contributes $0.50 for every $1 of after-tax contribution, up to $1,000 contributed
- Full co-contribution income threshold: $45,400 in 2025-26 - earn under this and make a $1,000 NCC to receive the full $500 co-contribution
- Taper: Co-contribution reduces above $45,400 and cuts off completely at $60,400
- Eligibility: Must be under 71, earn at least 10% of income from employment or business, lodge a tax return, and not hold a temporary visa
- No application needed: The ATO calculates automatically from your tax return and super fund data
- Career break strategy: In a year of career break or part-time return, if income falls in range - even $10,000 from casual work - the co-contribution can apply. Put $1,000 into super and receive $500 back
- Combine with LISTO: Low-income earners may qualify for BOTH LISTO and co-contribution in the same year - a powerful dual benefit
Career Break Planning
Leaving the workforce for caring responsibilities is the single biggest driver of the super gender gap. Planning before, during and after a career break can significantly reduce the long-term impact.
- Before the break: Maximise concessional contributions in the years leading up to the break - use salary sacrifice up to the $30,000 concessional cap. Build carry-forward capacity (unused cap can be carried forward for 5 years with balance under $500,000)
- Salary sacrifice before parental leave: Some employers allow salary sacrifice to continue through unpaid parental leave - check your award and enterprise agreement
- Paid parental leave SG from July 2025: From 1 July 2025, the government's Paid Parental Leave scheme will include SG payments - 11.5% super on the PPL payments. This closes a significant gap for primary caregivers
- Spouse contributions during the break: The higher-earning partner should make spouse contributions - even $3,000/year during a 5-year break adds $15,000 plus investment returns
- After the break: Use carry-forward contributions to catch up. If your balance was under $500,000 before the break, you may have accumulated 5 years of unused concessional caps to draw on
- Investment choice review: Returning to work is a good time to review investment options. If you have decades before retirement, a higher-growth option may be appropriate - historically growth options outperform balanced options by 1-2% per year over 20+ year periods
Investment Choice and Insurance
Two overlooked factors that disproportionately affect women's super outcomes are default investment risk and insurance premiums eroding balances.
- Default investment options: Many Australians, particularly women, stay in fund defaults. For someone 30 years from retirement, a conservative or balanced option may significantly underperform a high-growth option
- Compounding impact: $100,000 invested at 6% vs 8% over 30 years: $574,000 vs $1,006,000 - a $432,000 difference
- Review annually: Log into your super fund each year and review your investment option in the context of your age and retirement timeline
- Insurance in super: Group life, TPD, and income protection insurance inside super can be valuable - but premiums erode balances. Review whether you are over-insured or have duplicate cover across multiple funds
- Consolidate funds: Multiple super funds mean multiple sets of fees and insurance premiums. Find and consolidate lost super via myGov ATO portal
- Choose a high-performing fund: APRA publishes annual MySuper performance tests. Funds that consistently fail the test must notify members. Check your fund's performance rating - persistently underperforming funds cost members tens of thousands over a career
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