Influential super fund takes aim at Australia’s ‘gender retirement gap’

One of Australia’s largest superannuation funds is on a mission to close the gender gap that sees women on average retire with 30 per cent less super than men. 

Speaking exclusively to The Business Of, a podcast from the University of New South Wales Business School, Aware Super’s Chief of Staff Katrina McPhee says the $170 billion fund – which has 70 per cent female membership - is striving to get women on even financial footing with men. 

Data from Australia’s Workplace Gender Equality Agency recently revealed a woman is paid on average $18,000 less than a man over a year - and that has long-term consequences.

“Where we might have a 13 per cent pay gap, by the time you reach retirement, that's a 30 to 40 per cent retirement gap,” says Ms McPhee.

“Older females, retired females, are the fastest growing population within the homeless community, because there's been this baked in inequality in the system.”

While super funds are not in the business of determining salaries, Ms McPhee says they have an influential voice and play an important role in shaping policy.

She tells host Dr Juliet Bourke, a Professor of Practice in the School of Management and Governance at UNSW Business School, that since a bruising royal commission the system has become more competitive and human-centered.

“When I first joined, it was pretty non-competitive, lots of gentlemen's agreement-style, industrial relations-style industry, not overly innovative,” she says, adding it is now more dynamic.

It can be tricky for funds to take both a short-term and long-term view to investing to maximise returns for members. Ms McPhee says although investments like oil and gas might make great returns now, it is vital to adopt a long-term perspective.

“It's one thing to have money to retire, but if we don't have a wonderful world to live in, it feels counterintuitive. So climate change and energy transition are really important to us.”

She cites a key plank of Aware Super’s property investment strategy, their “key worker affordable housing plan” that involves a build-to-rent program – where large-scale housing is built and ownership retained by a sole entity for consumers to rent, as opposed to buy - as an example of getting it right. 

“We started looking at the build-to-rent market. How might we become a landlord, essentially, as a superannuation fund? And how might we then offer up more affordable rent to essential workers? So that’s what we did,” she explains.

“People often say, ‘Are you, by giving more affordable housing, giving up rent that would ultimately be returned for members?  But what we found is by giving that to teachers, nurses and police officers, they generally stay in properties far longer, they do less damage to the properties. And the communities that they build have been extraordinary. So what we're seeing is the profitability of those rental agreements over a long time.”

The Business Of host Dr Juliet Bourke – a global consultant and academic at UNSW Business School – added: "It was fascinating to hear what can be achieved in an industry after a moment of reckoning like a royal commission. This is a crucial listen for anyone leading an organisation that has institutional power with the potential to achieve wide-scale social good as well – like closing the retirement pay gap.”

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