Academic journal article The Economic and Labour Relations Review : ELRR

The Impact of Children on Australian Women's and Men's Superannuation

Academic journal article The Economic and Labour Relations Review : ELRR

The Impact of Children on Australian Women's and Men's Superannuation

Article excerpt


This article examines how the retirement savings of Australian women and men vary according to the numbers of children they have. In Australia women have historically tended to participate in the labour force less and earn less income than men owing to a range of legal, economic and social barriers (Evans 1996). Despite the progressive removal of these barriers over time, women continue to earn less than men (ABS 2005). Women also have tended to have less superannuation than men (ABS 2001; Ferris and Olsberg 2001; Kelly 2006). One of the contributory factors to women's lack of superannuation has undoubtedly been their loss of earnings as a result of having children (Chapman et al. 2001; Breusch and Gray 2004).

The value of superannuation is second in importance only to the value of home equity as a component of household wealth in Australia, accounting for 16 per cent of total net worth (Marks et al. 2005). As such it represents an important source of financial security in old age. Superannuation has become a major determinant of post-retirement consumption patterns and of government outlays on means-tested aged pensions. The prospective rapid growth of Australia's post retirement age population should further enhance its importance in these respects (ABS 2006a).

The HILDA survey presents a unique opportunity to analyse the variation of superannuation by the number of children on a per person basis, after allowing for confounding variables which are also likely to affect superannuation savings. Previous studies have investigated the distribution of superannuation contributions and average superannuation balances by age and gender. These studies have been based on various data sources such as superannuation funds membership, life insurance account balances, statistical reports from the superannuation regulator, (1) surveys from the Australian Bureau of Statistics, and data from the Australian Tax Office (2) (Brown 1994; Rothman 1995; ABS 2001; Clare 2004). However, the compilation of accurate data on the distribution of superannuation assets for individuals has been problematic, because many Australians hold multiple superannuation accounts spread across different funds and there are difficulties in linking the records from separate funds (ABS 2001; Kelly 2003). Furthermore, many Australians (especially younger Australians) have a poor knowledge of their own superannuation assets, which has led to significant under-reporting of superannuation assets in ABS surveys (ABS 2001, 2006b). Even where estimates of superannuation balances are available, there has previously been little information available on the distribution of assets according to social and demographic characteristics such as marital status, number of children, educational attainment, and migrant status.

This paper firstly outlines the structure and historical development of Australia's superannuation schemes. A survey of the literature on the economic effects of children and the patterns of fertility in Australia is then presented. We develop hypotheses on the paths through which having children may affect the value of women's and men's superannuation. The selectivity of childbearing patterns in Australia is described. A description of the data and our choice of statistical methods follows. After a descriptive analysis of the variation in women's and men's value of superannuation by their age and number of children, we then present the results of a multivariate analysis of the effects of children after controlling for a range of variables which are likely to affect both a person's number of children and their superannuation. Finally we discuss the implication of the results for public policy in Australia.

The Development of Australia's Superannuation System

Australia's current superannuation system operates through a complex combination of mandatory requirements and incentive-enhanced voluntary schemes. …

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