The $92,000 gender gap

The superannuation guarantee (SG) has been in existence for more than 2 decades now, which indicates that these who are presently heading towards retirement have had the benefit of compulsory retirement saving for at least half of their operating lives. And according to the Association of Superannuation Funds of Australia (ASFA) the very good news is that those workers are at the moment retiring with an average balance of $ 197,000.

If they’re male.

The undesirable news is that if these pre-retirees are female, the typical superannuation balance is just $ 105,000 – substantially reduce. It is a dollar amount that will only improve more than time probably even much more soberingly, ASFA report that the gender gap is just as pronounced for younger workers nonetheless in the accumulation phase.

Gender gap is understandable: females have a tendency to start off function later, are more likely to take extended leave due to family members commitments, finish work earlier due to family members commitments and earn less along the way. In reality CANSTAR has calculated that just 5 years out of the workforce can potentially result in a $ 156,000 hit to women’s retirement nest egg.

While there are numerous lifestyle selections that both guys and females make, all of which expense money in some type or other, the superannuation situation tends to impact ladies far much more so than guys. So – what to do about it?

As portion of a recent White Paper, ASFA has created 3 recommendations which, if implemented, would assist to at least narrow the $ 92,000 gender gap. They are

• Remove the $ 450 per month threshold for the SG. Currently the superannuation guarantee (the 9.5% of ordinary time earnings that employers are necessary to spend workers in the form of superannuation contributions) only applies for workers who earn a lot more than $ 450 per month. There is estimated to be roughly 250,000 Australians who miss out on around $ 75 million worth of superannuation due to this threshold. It particularly impacts these who function element time, casually, or for much more than one employer.

• Apply the SG to all substantive earnings replacement payments. Whilst the SG is paid on ordinary time earnings, ASFA suggest that it must be extended to payments such as parental leave. According to ASFA, even just 6 months of SG applied to the paid parental leave of a 35-year-old lady earning $ 50,000 could add an extra $ 10,000 to her final super balance.

• Permit employers to contribute a lot more to the superannuation accounts of women. At present, employers can not discriminate by paying their female employees a higher rate of SG payments than the rate they pay their male staff. ASFA think that the Anti-Discrimination Act must be amended to make certain employers can pay their female staff more superannuation, with out being in breach of the Act.

Certainly there requirements to be some thoughtful policy choices in this region, with a quantity of Australian studies, which includes this a single, discovering that females face a far greater threat of poverty in retirement than guys. “Many girls face challenges when it comes to accumulating sufficient retirement savings,” notes ASFA CEO Ms Pauline Vamos. “Policymakers need to urgently address the problems girls have when it comes to their super, otherwise, we will have a expanding quantity of women living in poverty when they retire.”

The $92,000 gender gap

The $92,000 gender gap

The superannuation assure (SG) has been in existence for much more than 2 decades now, which means that those who are currently heading towards retirement have had the advantage of compulsory retirement saving for at least half of their working lives. And according to the Association of Superannuation Funds of Australia (ASFA) the good news is that those workers are at present retiring with an average balance of $ 197,000.

If they’re male.

The negative news is that if those pre-retirees are female, the average superannuation balance is just $ 105,000 – significantly lower. It’s a dollar amount that will only improve over time possibly even far more soberingly, ASFA report that the gender gap is just as pronounced for younger workers nevertheless in the accumulation phase.

Gender gap is understandable: girls have a tendency to begin work later, are more likely to take extended leave due to loved ones commitments, finish operate earlier due to loved ones commitments and earn much less along the way. In fact CANSTAR has calculated that just 5 years out of the workforce can potentially cause a $ 156,000 hit to women’s retirement nest egg.

Whilst there are several way of life options that each males and females make, all of which price money in some form or other, the superannuation situation tends to impact women far more so than men. So – what to do about it?

As part of a current White Paper, ASFA has produced 3 ideas which, if implemented, would aid to at least narrow the $ 92,000 gender gap. They are

• Remove the $ 450 per month threshold for the SG. Presently the superannuation assure (the 9.5% of ordinary time earnings that employers are necessary to pay workers in the form of superannuation contributions) only applies for workers who earn much more than $ 450 per month. There is estimated to be around 250,000 Australians who miss out on about $ 75 million worth of superannuation due to this threshold. It especially impacts those who operate component time, casually, or for more than 1 employer.

• Apply the SG to all substantive earnings replacement payments. Even though the SG is paid on ordinary time earnings, ASFA recommend that it should be extended to payments such as parental leave. According to ASFA, even just 6 months of SG applied to the paid parental leave of a 35-year-old woman earning $ 50,000 could add an extra $ 10,000 to her final super balance.

• Permit employers to contribute much more to the superannuation accounts of girls. At present, employers can’;t discriminate by paying their female employees a higher rate of SG payments than the price they pay their male staff. ASFA think that the Anti-Discrimination Act must be amended to guarantee employers can pay their female workers far more superannuation, without becoming in breach of the Act.

Undoubtedly there needs to be some thoughtful policy choices in this location, with a quantity of Australian research, which includes this one, locating that girls face a far larger threat of poverty in retirement than guys. “Many ladies face challenges when it comes to accumulating sufficient retirement savings,” notes ASFA CEO Ms Pauline Vamos. “Policymakers need to have to urgently address the concerns ladies have when it comes to their super, otherwise, we will have a developing quantity of females living in poverty when they retire.”

The $92,000 gender gap

Is the ECJ Gender Directive failing male motorists?

It’s getting on for 2 years since the European Court of Justice’s (ECJ) Gender Directive kicked in.

This ruling, which took effect on December 21, 2012, bans insurers from charging men and women different prices purely on the basis of their gender.

But we’ve found that the ambition of creating a level playing field between male and female insurance buyers has not been fulfilled, at least as far as car insurance is concerned.

And it’s young male motorists who are still being hit hardest when it comes to premiums.

Pain in the pocket

The latest analysis from MoneySuperMarket’s number-crunchers has found male drivers aged 17 to 19 are paying 26% more for cover than their female contemporaries.

The figures reveal that, while female motorists in this age group pay an average of £893 a year for car insurance, male drivers in the same demographic pay £1,129 – that’s £236 more!

And although it’s young male motorists who are being hit hardest in the pocket hit, it seems this is part of an overall trend that sees men paying more for cover, no matter what their age.

Gender on the agenda

Women historically paid less for car insurance than men because, as a demographic, they made fewer claims – and those they made were generally of a lower value.

The gender ruling sought to put an end to insurers making gender-based assumptions on all kinds of insurance, including car, life and health insurance plans, as well as annuities.

You can see why this was controversial. The stats proved that women deserved to pay less. And there’s no evidence that anything has changed in recent months as far as women’s driving habits and capabilities are concerned. So they still deserve to pay less.

Shift to neutral?

Now we’ve found that, despite the introduction of gender-neutral price-setting, men are still paying 22% more for their car insurance than women, having seen premiums rise by 3.2% to an average of £439 over the last 12 months.

Women, on the other hand, have seen premiums rise by just 1.8% over the same period and now pay an average of £360 for a year’s cover.

Underwriting under scrutiny

But how can this be? Why isn’t the ECJ crashing down on motor insurers like a ton (sorry, tonne) of bricks in pursuit of its beloved level playing field?

That’s a tough one to answer. There’s no suggestion that insurers are sneakily using gender (they know if from the application form) to determine how much they’ll charge. And yet the price differentials are pretty much what you’d expect if they did.

Spooky, non?

Insurance underwriting – the process of determining how risky something is and charging a certain premium as a result – is a complex science. Motor insurance underwriters take all manner of things into account, including the type of car, the driver’s occupation, driving record, where s/he lives and his or her age.

So all we can assume is that insurers are relying on whatever information comes to hand about claims and charging more for the sorts of cars and drivers that are involved. And the net effect – you could even call it an unintended consequence – is that things have stayed pretty much as they were, at least as far as gender differentials are concerned.

All round bad news

That’s not to say car insurance premiums generally aren’t on the move. After a couple of years of falling premiums, the bad news for all motorists is that car insurance prices are up right across the board in recent weeks, with overall premiums rising to an average of £401 – the first price increase of 2014.

Although this is still considerably lower than this time 3 years ago, when annual premiums hit a high of £512, it highlights the need to shop around and compare quotes when renewal time rolls around.

Premium inflation

Kevin Pratt, Car Insurance Expert at MoneySuperMarket said: “Premium prices do fluctuate, and while we’ve been in a deflationary market for car cover for the last few years, costs are now creeping back up.

“What is surprising is that despite the fact that gender neutral pricing has been in place in the car insurance market for several years now, the battle of the sexes is still raging on. It seems men are still falling foul of car insurer’s risk profiling systems – but a raft of factors will influence this, including postcode, profession, make of vehicle and points on a licence.

“For car insurance, the bottom line is always to keep an eye on your renewal premium, to always shop around and therefore seek out the best possible deal for your circumstances – keep calm and compare.

“With premium prices currently trending upwards, it is even more important to make sure you aren’t paying over the odds on your renewal.”

Is the ECJ Gender Directive failing male motorists?