Australian census: women are living longer, and on less

Australia’s approach to pensions and super disadvantages women. HarryetN

AUSTRALIA BY NUMBERS: The Australian Bureau of Statistics has released the first batch of its census data. We’ve asked some of the country’s top demographers and statisticians to crunch the numbers on Australia’s population: how we live, where we work, who our families are and how we spend our time.

Here, Rafal Chomik shows us what census data can tell us about the quality of our retirment, and why women have it harder.

Census data is fascinating not only because of what it can tell us about the nation’s social and demographic history but because of what it can teach us about the changing context in which we design our social policies.

Possibly one of the greatest changes that we have seen over the century is in the role of women in society.

The 1911 census, in recording the occupation of those older than 15 years of age, found that 83% of women were without profession and were “dependent” on their family. The remaining 17% were largely involved in domestic service and professions, such as textile and dress making.

Female life expectancy at the time was 59, four years higher than that of men. This, in addition to large age gaps between married couples, meant that women who had been reliant on their husbands would find life more difficult in their old age.

To address this, the Australian government introduced the Commonwealth Age Pension in 1909 (superseding some state-based pension arrangements). It was visionary at the time: the United Kingdom’s state pension was not instituted until 1948.

Unlike the pensions systems in most other OECD countries, where payment was dependent on years in the labour force, level of earnings, or both, the means-tested Age Pension allowed for a retirement income that was not simply derived through a woman’s marital bond to her husband.

This is just as well, since the Census shows these “marital bonds” weakened over the years. By the time women who were in their 20s in 1911 were in their early 60s, only 1% of them were divorced. Of the women in their early 60s now, some 15% are entering retirement divorced. In future, many may not have married at all.

Of course the world has changed in various other ways since Australia’s retirement income system was first conceived.

Not only has life expectancy dramatically increased, but many Australians also expect much more from retirement than their age pension income can afford. This is where the superannuation guarantee comes in. For most people, this allows an income replacement mechanism so that their retirement is closer to what they were used to in working life.

But here is the catch. Occupational savings through super favour what has traditionally been a typical male working pattern of continuous, full-time work with a career trajectory of increasing earnings.

So, as the significance of self-funded retirement has increased, women’s social, economic and demographic circumstances have prevented them receiving pension entitlement in their own right. Despite the improvements in gender equality, the average woman lives longer, works less, earns less, and accumulates lower levels of pension savings that must last longer, than is the case for men.

Looking at 2010 data, women between 60 and 64, who have some 22 years of life to live after they reach pension age, may be able to able to top up their Age Pension with some superannuation – but their average balances were approximately $110,000.

Men, on the other hand, have about 17 years of their life left to furnish with nearly twice the Super savings of $200,000.

Our retirement system has not kept pace with some of these changes.

In 1911, women’s eligibility age for the pension was 60, which, given a life expectancy of 59, meant that few of them lived long enough to rely on it.

While women 65 and over comprised 4% of the female population in 1911, the latest Census shows that they now make up 15%. By 2050, the ABS estimates this figure will be 24%. With further increases in life expectancy, women can expect to live about a quarter of their life beyond even the increased Age Pension age of 67.

Many may want to work longer than current cohorts. It does not help that access to super starts at age 60, which is a signal and an enticement for people to retire early. Those overcoming the disincentives to work created by the pension system can be confronted by barriers in the labour market, such as age-discriminating employers.

Thankfully, even in the realm of labour market participation of mature-age workers, women are catching up. ABS figures show that, in 2000, 48% of women over the age of 55 were in the workforce, which increased to 65.8% by 2011 – a far cry from the 17% figure in 1911. As my Centre for Population Ageing Research colleague, Peter McDonald, recently noted, future increases in mature age participation rates, which are welcome in the face of population ageing, will be driven by women, particularly because of the reduced age gaps between married couples.

We have come a long way since the 1911 census. But it will take more social change and policy intervention to help women close the gap in working life as well as retirement.

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