The issue: Retirement income
Historically, the discipline of economics has neglected subjects that particularly affect women, such as, unpaid household labour, care work, discrimination, undervaluation and intrahousehold economic relations. The measurement and analysis of these experiences is still only patchy. In the case of retirement income and savings policy, the focus of economists over the past 30 years has been on ageing populations, increased longevity and the rising cost of aged income support to the public purse. These economic analyses of retirement income and savings policy frame the issue as an individual rather than a structural problem; policy prescriptions are about maximising individual choice rather than providing for human needs. Markets rather than governments are seen as an efficient mechanism for achieving these policy outcomes, while the contribution of unpaid productive activities is ignored and implicitly assumed to be unlimited in supply. In line with experience in many industrialised countries, this framing of retirement income and savings policy in Australia has seen a shift towards ‘self-provision’ in retirement with an important aim being to reduce the numbers of aged persons in receipt of the age pension and its cost to government. Key policy changes have included the introduction of occupational superannuation in the form of the Superannuation Guarantee Charge in 1992 and the provision of increasingly generous taxation concessions for individual retirement savings.
This policy direction has facilitated the development of a huge private sector superannuation industry whose assets were valued at $2.3 trillion by the Australian Association of Superannution Funds in March 2017. This is greater than Australia’s whole GDP and represents the world’s fourth largest superannuation pool. The policies have also produced a very high level of gender inequality in retirement income. In 2013–14 the median superannuation balance of Australian women aged 65 and older was a fraction of men’s ($5,586 compared to $37,032). The intersection of gender with other disadvantages results in further inequality, with 45.9% of women and 37.8% of men aged 65 and over having zero superannuation in 2013–14. Partly reflecting the gender gap in superannuation, Australian women are much more reliant on the age pension and other payments than men. The gender gap in superannuation contributions emerges in the youngest group of Australian taxpayers, and persists throughout the life-course. While the gap varies over the life course, women’s superannuation amount balances are never equal to (a ratio of 1:1) or higher than those held by men (see Figure 1). Men’s superannuation account balances exceed women’s in each and every age group. This means there are currently few prospects for improvements in gender equity in retirement income in coming decades; a concern that is echoed across the industrialised world.
Figure 1. Ratio of male to female average superannuation account balances
Source: ATO 2% file data, 2013–14
Feminist economics has emerged to address the wide range of issues important to women and gender equality that have long been neglected by orthodox economic analysis. It has a relatively short formal history with the incorporation of the International Association for Feminist Economics (IAFFE) in 1992 and the launch of its journal, Feminist Economics, in 1995. Generally, feminist economics counters the masculinity of mainstream economics by addressing the realities of women’s lives and their economic and other contributions, and it challenges definitions of the economics discipline in masculine-only terms. Feminist economists have articulated efficiency and equity rationales for gender-disaggregated economic studies, and they have developed and implemented new constructs and evidence to facilitate such investigations. More broadly, feminist economics shifts the definition of economics away from a singular focus on the generation and possession of material wealth by isolated individuals towards a study of how individuals create value in relationships with others and in various contexts (markets, households and organisations). Feminist economics unlinks gender from sex and, in doing so, counters the mainstream tendency to interpret differences in economic actions and outcomes as the product of essential differences in men’s and women’s natures. This also allows feminist economic analyses to acknowledge the relatively broad range of motivations and interests that influence men’s and women’s economic decisions. Through a focus on the gendered nature of economic structures and processes, feminist economics brings to the fore the patterns of gender, class and other power relationships that are produced and re-produced in economic systems.
Feminist economic studies of retirement income and savings policy identify and unpack the large gender inequities and inefficiencies that policy directions based on gender-blind economic theory have created. The studies emphasise the vulnerability of women to poverty in old age under the current regime. They highlight how occupation-based contributions to retirement income reproduce (and often magnify) gender and other differences in paid work and they pose alternatives that would better serve the retirement income needs of both women and other disadvantaged groups.
The economic relevance of retirement income and savings policy to women and the extent of women’s unequal access to superannuation was first detailed in a chapter of Rhonda Sharp and Ray Broomhill’s 1988 book, Short-changed: Women and Economic Policies. This study documented women’s historical lack of access to superannuation, identified how the the policy changes of the Hawke Labor government would perpetuate gender inequalities into retirement, and outlined the elements of a feminist strategy for policy change. Women’s lower relative earnings, less time spent in paid work, loss of access to partner superannuation in the event of marriage break-up, discriminatory terms and conditions of superannuation schemes and regulations were identified as factors that served to lower women’s access to superannuation relative to men’s. The study critiqued the Hawke government policy changes on the grounds that women’s patterns of paid and unpaid work would likely result in lower access to superannuation and retirement benefits compared to that of men. Also, the policy of providing generous tax concessions to superannuation would afford major opportunities for high income earners to increase their retirement incomes while delivering only limited benefits for low income and marginally attached workers.
Short-changed identified the dynamics of gender inequality embedded in retirement incomeand savings policy at the time. It noted ambivalence concerning the role of the state in Hawke government policy, and the iron grip that a gender-blind orthodox economic theory was exerting over economic policy formulation. One of the driving forces of the policy was a desire to shift the burden of providing retirement incomes away from the age pension and onto individuals; to reduce the state’s role in providing for social reproduction. The age pension was neutral in relation to the mix of paid and unpaid work performed over the life course. An express motivation for these changes was concern about the cost of public welfare as the Australian population rapidly aged. However, as Short-changed noted, the generous tax concessions created new pressures on the state's budget. It predicted this would ultimately create pressure for further cutbacks in areas of particular importance to women.
The feminist strategy to engender retirement income and savings policy outlined in Short-changed included a long-term proposal for the restructuring of the system away from occupational superannuation. It noted the significant disadvantage suffered by women compared to men under occupational superannuation because it ties retirement income to full participation in the labour market. A retirement income and savings policy based upon a universal strategy, and which shifts the system away from the uncertainties and risks of private superannuation funds, was identified as a more equitable and efficient policy approach. Short-changed warned that such changes would meet strong opposition from powerful interests benefiting from the privatised system, namely high income men and the large superannuation and insurance funds and banks.
Subsequent feminist studies of the Australian retirement income and savings system have elaborated on themes raised in Short-changed. Many of these have highlighted the magnitude and deep-seated nature of the gender equalities in Australia’s retirement and savings system through use of economic models that incorporate gender-disaggregated data. At the IAFFE conference in 1998 Susan Donath spoke to what she called ‘The continuing problem of women’s retirement income’ with her estimates of the limited superannuation benefits that women in different income groups derive over a lifetime. She showed that even if women were in paid work continuously for 45 years, if they were low paid their superannuation savings would not produce a flow of retirement income that exceeds the age pension.
Further confirmation of women’s limited benefits from superannuation savings was provided by Alison Preston and Siobhan Austen’s 2001 study that used micro-simulation methods to show that career breaks before the age of 40 also undermined women’s superannuation savings – and retirement incomes. Their modelling demonstrated the importance of factors relating to workforce attachment (hours worked, career breaks, and the gender pay gap) to the gender gap in superannuation, and it further highlighted the vulnerability of women to inadequate retirement income. In a follow-up study by Therese Jefferson and Alison Preston in 2005 the implications of the retirement income system for baby boomer women (born between 1950 and 1960) was addressed. The modelling included in this study estimated that over their lifetimes women in the baby boomer cohort would spend 35% less time in paid employment than their male counterparts, and it predicted that, in combination with the effect of the gender pay gap, this would translate into a gender superannuation gap much greater than 35%. These results further reinforced the importance of an age pension for gender equality.
Therese Jefferson’s qualitative study of women’s experiences of retirement savings further developed understandings of the links between the structuring of women’s decision-making through the life course and their later access to economic resources. This doctoral thesis highlighted how superannuation links the entitlement to independent retirement income to an individual’s participation in paid work, but also noted that many women’s access to retirement income was adversely affected by household decision-making processes that reproduce traditional savings patterns. The research challenges the assumption of orthodox economic analysis that individuals make decisions about their retirement savings with a view to expected future outcomes. Jefferson showed how many women’s retirement savings decisions were shaped by social context and were little influenced by expected outcomes in later life. Relevant features of this decision-making context include the complexities of decision making in multi-person households, gender norms relating to household financial management and workforce participation and the emotional aspects of making decisions about retirement savings.
A further important theme of feminist economic studies of retirement income and savings is the integral role of reproductive and caring work in capitalist economies, and therefore the importance of understanding the interactions between the paid and the unpaid economies. Orthodox economic analysis and policy has typically ignored the unpaid economy and its contribution to social reproduction, and has thus produced retirement income and savings policies that are negative for both gender equality and macroeconomic efficiency. Julie Smith tackled these issues by noting how current retirement income and savings policies penalise individuals who take on unpaid care roles including breastfeeding and infant care, and in doing so, can both discourage the provision of cost-effective and high quality care and undermine the quality of the future labour force. She argues that policies that seek to facilitate private spouse contributions on behalf of mothers during periods of reduced paid work tend only to reinforce gendered patterns of paid and unpaid work.
Gender budgeting provides a further important focus for Australian feminist economic studies of retirement income. Rhonda Sharp and Siobhan Austen provide a gender analysis of the taxation and expenditure measures in the 2006 federal budget, which planned major changes to retirement incomes and savings policy. Sizable revenue losses from a range of concessional taxation measures for superannuation were identified and shown to give the greatest gains to those in full-time work and on the highest marginal rates of tax, thus exacerbating already high levels of gender inequity in Australian retirement incomes. The application of a gender lens to the budget was further extended in a 2015 article by the same authors with Helen Hodgson that outlined a gender impact assessment framework. This framework could be utilised to systematically assess the gender impact of a range of taxation and expenditure measures relating to retirement income and savings. The study highlighted the continuing need to provide a gender perspective on the resource allocations prioritised in the budget for retirement incomes. These large allocations not only impact differentially on men and women but they discriminate against individuals whose economic and other contributions occur through unpaid work.
Impact and future directions
Over the past three decades feminist economics has contributed to a broader feminist critique of retirement incomes and savings policy. In this context feminist economics has played a role in establishing a research and policy agenda around women’s access to a decent retirement income. In 1985 when the Hawke Labor government made superannuation the linchpin of its economic strategy, the critical need to integrate a gender perspective into economic policy was poorly recognised. Today the topic of women’s retirement income is widely discussed. Feminist critiques have developed an agenda for research and policy changes to retirement income and savings policy on equity grounds. Feminist economics has made valuable contributions to that agenda and has been particularly important in efforts to outline the efficiency arguments for policy reform. To achieve this, feminist economists have needed to challenge both existing policy ‘visions’ and the assumptions embedded in orthodox economic models.
The contributions of feminist economics around retirement income and savings policy have increased the visibility of the unpaid economy – and women’s central role in social reproduction. These contributions have highlighted the contradictions between economic policy that, on the one hand, seeks to increase women’s labour force participation as a means of promoting economic growth but, on the other hand, defunds investments in reproductive and care work in the unpaid economy, which are vital to future economic growth.
The continuing challenge posed by feminist economics to the orthodox assumptions of economic policy is critical for promoting gender equality in retirement incomes and savings policy. A future research and policy agenda will involve further explorations of these assumptions as well as translating existing research into an effective strategy for policy and budgetary changes.
Austen, S., Sharp, R., & Hodgson, H. (2015). Gender impact analysis and the taxation of retirement savings in Australia. Australian Tax Forum, 30 (Special Issue), 763–81.
Austen, S., & Sharp, R. (2017). Budgeting for women’s rights in retirement. In M. Stewart (Ed.), Gender equality in Australia’s tax/transfer system (Ch.10). Canberra: ANU Press.
Jefferson, T. (2005). Women and retirement incomes in Australia: A review. Economic Record, 81, 273–91.
Sharp, R. & Broomhill, R. (1988). Women and superannuation. In R. Sharp & R. Broomhill, Short-changed: Women and economic policies (Ch. 5). Sydney: Allen & Unwin.
Smith, J. (2007). Time use among new mothers, the economic value of unpaid care work and gender aspects of superannuation tax concessions. Australian Journal of Labour Economics,10 (2), 99–114.