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Women and low-income earners miss out in a superannuation system most Australians think is unfair

Most Australians think the superannuation system is unfair, with only one in three agreeing the retirement savings scheme is fair for most Australians, according to a survey conducted for the University of Melbourne.

In fact, only about half of those surveyed agreed superannuation works well for them.

These results contradict a conventional view based on earlier studies and held by academics and many in the personal finance sector, that Australians give little thought to superannuation.

A 2013 survey found Australians have poor knowledge of how the superannuation system works, while another study in 2022 highlighted low financial literacy in general.

Australians also showed little interest in superannuation, according to a 2020 Department of Prime Minister and Cabinet survey, with few Australians showing interest in reading their superannuation statements, choosing their fund or making voluntary contributions.

A large pile of unopened letter on a desk top
A 2020 survey found many Australians were not interested in reading their superannuation statements. Shutterstock

With Australian households seen as uninformed and uninterested, their opinions tend to be left out of the public debate. We hear much about the gender pension gap, for example, but little about what women actually think about superannuation.

Similarly, the distribution of tax advantage in superannuation is hotly debated by economists but survey data tends to refrain from asking households what they think about equity in the superannuation system.

Read more: Super has become a taxpayer-funded inheritance scheme for the rich. Here's how to fix it – and save billions

The University of Melbourne survey of 1,003 Australians was undertaken by Roy Morgan Research in April.

Its results show women and low-income households are widely seen as disadvantaged in the superannuation system.

In fact, only one in five Australians see the superannuation system as well suited to the needs of women and of low-income households, while 70% believe super favours wealthy households.

This suggests although Australians may show little interest in the management of their super accounts and may report they find the system confusing or even boring, they are surprisingly aware of how superannuation is distributed.

Women, singles and low-income earners miss out

The federal government’s 2020 Retirement Income Review documents these gaps. Renters, women, uncoupled households and those on low-incomes fare poorly in the retirement income system.

With little super to supplement the public pension, these groups are vastly over-represented in elderly poverty statistics, which are among the highest in the OECD.

Mirroring the gaps in the superannuation system reported by the review, the University of Melbourne survey shows that it is outright homeowners and those who are married who believe the superannuation system works well.

Concerns the system works poorly for women and low-income households are strongest among women and low-income households. Only one in three renters believe the superannuation system meets their needs.

This suggests individuals’ concerns about fairness in the superannuation system are driven by their own experiences of disadvantage, regardless of financial literacy.

This is consistent with my own research into household attitudes to superannuation, which showed some resentment among women who were well aware their male partners had substantially higher superannuation balances than them.

This all matters for policymakers.

Why public perceptions are important

In the short term, these results suggest public support for making super fairer is likely to be stronger than previously thought. Recent government changes to tax concessions on large balances, for example, could have gone much further without losing support from the 70% of households that think the system favours the wealthy.

But it matters for the longer term too.

Public perceptions of fairness, effectiveness and efficiency are crucial to policy sustainability. This is well established in the academic literature from B Ebbinghaus, 2021 and H Chung et al., and accepted by the Retirement Income Review.

Read more: Age pension cost to ease by 2060s but super tax breaks to swell: Intergenerational report

The review assessed the public’s confidence in the system to both “deliver an adequate retirement income for them(selves) and (to) generate adequate outcomes across society”.

As the review makes clear, the system must avoid a loss of public confidence from perceptions of unfairness.

Yet perceptions of unfairness are exactly what the University of Melbourne results suggest. This would have been clearer to policymakers if they asked earlier.

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