Small strategies can help close gender super gap: expert
Women do not experience as large a gender gap in SMSFs compared to industry or retail funds, says an experienced adviser.
Chris Reed, specialist adviser and director of Business Concepts, said in a recent podcast that current statistics show that women in larger, industry-controlled funds have around 29 per cent less in super when they retire, but for women in SMSFs the gap is only 16 per cent.
“That doesn't mean that SMSFs are doing all that work, but I think it probably indicates that people who are involved in SMSFs are more engaged with their superannuation,” Reed said.
“Advisers are part of that engagement and can be giving advice and helping clients take control of their investments, and devising strategies that go with them.”
Reed said several strategies can help narrow the gender gap in super.
“Some statistics also note that the next generation of SMSF trustees coming through has been set up as potentially single-member funds and driven by females and that is really getting into the space of taking control of your super and getting the education and the advice to make sure you're putting in place the things that allow you to grow wealth throughout life,” he said.
One of the more common strategies in ensuring that women can build wealth through super is concessional and non-concessional contributions and ensuring clients are optimising the mix with taxable incomes.
“It is usually around targeting the concessional cap to maximize tax benefits around making those contributions. Flowing on from that it's not just the concessional contribution but also accessing the carry forward, concessional contributions that haven't been used in prior years,” he said.
“A lot of these strategies do take some cash flow, so you do need to have a plan around money inside and outside of super, but there are some other little strategies that can also be used that don’t require as much cash flow.”
As many women tend to take time out from the workforce and there is a break in super contributions as a consequence, a strategy such as spouse rebate or co-contribution can help maintain the super balance.
“You don't have to have a heap of money to do these strategies but over the long term, they can really make a difference, especially if you're invested for 30 or 40 years,” Reed said.
“If money is a little bit tight, and a client is not working, then there are still little things that you can do to help boost that balance long term.”
He added that spouse contributions are limited to a maximum of $3,000 but the spouse who contributes gets a tax advantage, and in a co-contribution strategy, the non-working member can add $1,000 to their balance and the government will match that with $500.
“There are income tests around both of these, so once again, advice is helpful around these strategies,” he said.
