We need to talk about the other super gap

November 2017

‘Hunter’ - Glasswork created by Philomena Masters based on an image by John Marlba Beck.

When we think about the retirement savings gap, the gender gap generally comes to mind. But another rarely discussed gap sees the average indigenous Australian likely to retire with 27% less super than non-indigenous Australians.

Making up the indigenous super gap would mean working an extra four years until age 71—the median age for life expectancy among indigenous Australians.

This and other key concerns drove UniSuper member Dr Robert Bianchi, Associate Professor at Griffith University, to understand some of the challenges many indigenous Australians face in retirement. We recently discussed the study’s key findings with Dr Bianchi.

What motivated the research?

Professor Michael Drew, Dr Adam Walk, Dr Osei Wiafe and I were motivated by the lack of understanding of the retirement gap between the average Australian worker and those on lower incomes.

We gathered data on indigenous Australian workers and compared their income levels to the typical Australian worker to measure the differences in retirement outcomes between the two groups.

The study revealed that, on average, indigenous workers retire with 27% less super than non-indigenous Australians. Why is this?

It’s unfortunate, but it’s because of differences in their present weekly income levels. Using 2013 data from the Australian Bureau of Statistics (ABS), we found that the median income of non-indigenous Australian workers is $950 per week compared with $734 per week for indigenous Australians. 

This $216 difference per week translates to a 23% earnings gap. When you contribute 9.5% of your earnings into super over 40 years and your income levels are different, these two workers will accumulate different super account balances—on average, 27%.

What were some other interesting findings from the research?

Another striking finding was that the typical indigenous Australian worker would need to make super contributions of 14.3% to reach an ‘ASFA comfortable’ super balance at age 65. This compares with 11% for non-indigenous workers.

Why was it difficult to gather data for this research?

When we started this project, we assumed there was a lot of financial data and statistics on indigenous Australians. After some time, we realised this wasn’t the case, and that there are gaps in our understanding.

We advocate that the ABS and the Australian Taxation Office (ATO) release more data and information on indigenous Australians so more research and practical assistance can be dedicated to this important group.

What can be done to help close the gap?

This research demonstrates that the current earnings gap between indigenous and non-indigenous Australian workers translates into large differences in retirement outcomes.

Government initiatives to improve the education, health and income outcomes of indigenous Australians would be enormously helpful in closing today's earnings gap, resulting in higher super balances and adequate savings at retirement.

Other things to consider would be some flexibility in the age restrictions for accessing super at retirement and more support for successfully navigating the super system.

What do you hope this research will achieve?

There’s been a lot of government and media attention given to the wealthiest Australians and their super outcomes. I feel that more attention needs to be dedicated to those at the other end of Australia's socio-economic spectrum.

Doctor Robert BianchiDr Robert Bianchi, Associate Professor at Griffith University.

Griffith University is part of the CSIRO-Monash Superannuation Cluster. We’re committed to highlighting the insightful work and research our members undertake in the course of their occupations. This feature is for informative purposes only and doesn’t represent UniSuper’s views.