When a couple separates or divorces, they must split their assets – but superannuation, the second-most valuable asset in this pool, is almost always poorly divided or overlooked entirely.
This is because of the ‘gender superannuation gap’, a phenomenon born from our global gender pay disparity that sees women less educated and equipped to pursue an equitable split of the asset they are rightly entitled to a portion of.
Sadly, the consequences of this are far from harmless – not only does the gender super gap create short-term financial issues for women post-divorce, but these can spiral into much larger repercussions, including increased susceptibility to family violence, homelessness, and long-term poverty.
So, what can we do about levelling the playing field, and addressing the major societal fallouts of financial inequity in the process?
The gender superannuation gap and separation
Australia’s gender pay issue means women are retiring with up to 25% less money in superannuation than men, according to a report from The Association of Superannuation Funds of Australia (ASFA) in 2023.
But, for the almost one-half of our population who will experience separation or divorce in their lifetime, the financial consequences are even more dire. Women retiring now who separated from their spouses prior to 2002, when superannuation was made part of the shared asset pool, have a staggering 113% less superannuation at retirement compared to divorced men.
Why does the gender super gap exist?
The gender superannuation disparity exists for one major reason: the current divorce system is geared in favour of men and against women. The factors that limit women from pursuing an equitable split of their own and their former partner’s superannuation include:
Lack of superannuation education
Although superannuation is classed as a shared asset in a partnership, this doesn’t mean that women are any more educated about how to access it, or even that they have the right to do so. Many women don’t know about super splitting, and if they do, there are very few resources available to help them smoothly and quickly navigate this process.
The burdens of separation imposed on women
Social factors, such as the mental load, financial burdens, and the inherent caregiving responsibilities placed on women make pursuing legal proceedings in the wake of separation a tough task. A survey of 568 people conducted by The Separation Guide revealed that 48% of women have experienced high-conflict or unfair separations.
“Women are stepping away from conflict and in the process are not getting access to advice, and that is costing them,” says Angela Harbinson, CEO and Founder of The Separation Guide.
“Anecdotally, we find many women fear the cost and emotional toll of fighting for their fair share of their partner’s super, as they are scared the costs of conflict will negate the benefit received.”
“With limited access to funds, women are vulnerable and fearful about their short-term security, which can make them feel paralysed to move forward and pay for advice,” she says.
This trend of leaning away from legal advice has costly consequences for women’s long-term financial security, which then can spiral into endless social repercussions.
Inefficiencies in the super splitting process
The current process for splitting one’s superannuation during a separation is slow, costly, and cumbersome, and has led to women turning away from their right to financial equity.
You can read more about the roadblocks imposed by Australia’s error-fraught superannuation splitting system here.
The link between the gender super gap and family violence
The current superannuation and super splitting systems contribute to a higher risk of financial disadvantage amongst women, which in turn, feeds homelessness, financial abuse, and critically, family violence.
Australia’s gender-based violence and financial abuse epidemics
An already prominent issue in Australian society – over 50 women have been killed from violence in Australia in 2024 to date – domestic and family violence is further exacerbated by financial instability, and becomes harder to navigate the less capital a woman has access to.
Data from The Separation Guide shows that of 32,000 people who completed an online educational Q&A about finance and family violence, 41% of those who identified as female were not confident their partner was being open and honest about their financial affairs.
A further 42% of the people who responded as such requested further information about family violence from the service. This effectively categorises them as at risk of potential financial abuse.
Where superannuation comes in
By being so difficult to understand and access, the current superannuation and super splitting systems do nothing to mitigate gender-based violence. If women don’t have the financial resources, time, or education to pursue an equitable separation of super following a relationship breakdown, they put themselves on the back foot and impact all of their future financial endeavours.
“Women are often more concerned about short-term needs like putting a roof over their head, feeding their children and protecting their safety,” says Ms Harbison. “This means their long-term needs, like growing their super balances, are overlooked.”
By not protecting these long-term needs, women are more likely to slide into poverty, which then can provoke the myriad social consequences of financial insecurity that we have explored.
Addressing the gender-based issues caused by superannuation inequities
It’s clear that we must pursue structural change to financial systems in Australia, both pertaining to superannuation and more broadly, to supporting victims of gender-based violence.
A new Government funding package to prevent violence
On Friday, 6 September 2024, Prime Minister Anthony Albanese announced that the National Cabinet had agreed upon a comprehensive $4.7 billion package to prevent family violence and support essential legal services.
Specifically, this package will fund:
- Much-needed support for front-line specialist and legal services addressing gender-based violence
- Innovative approaches to identifying and responding to high-risk perpetrators to curb the escalation of violence
- Research into the role that systems and harmful industries play in exacerbating violence
How The Separation Guide is supporting the Government’s plans
In light of this package from the Federal Government, The Separation Guide is proposing a complementary low-cost solution, backed by public and private investment, to combat the dual issue of gendered financial inequality and rising rates of gender-based violence.
The Separation Guide’s proposed platform will serve as a central place for people navigating separation, particularly those experiencing financial challenges and family violence, to receive subsidised support from lawyers and financial professionals. It will directly benefit them by connecting them to private and public funding to pursue equitable financial outcomes.
Ms Harbison suggests that what sets The Separation Guide’s solution apart is how cost-effective it is in the grand scheme of the multi-billion-dollar divorce industry.
“Every separation costs our society $868,792, which equates to $1,400 per day – yet our solution at The Separation Guide costs a mere $6.60 per day,” she says.
To make this new platform a reality, The Separation Guide has partnered with providers like Law in Check, which monitors and regulates fees charged by lawyers, and JustFund, a family law finance provider supporting women and victims of gender-based violence to secure funding for legal advice.
How the platform works
The platform generates a step-by-step plan personalised to an individual’s circumstances, with immediate, localised and holistic support across legal, financial, parenting, wellbeing, and property issues. It offers connections to relevant providers and subsidised advice on these matters and more.
“We can’t afford to wait for the Government to develop these support processes in 2025,” Ms Harbison says. “Our system is built and ready to deploy. It’s already triaged over 32,000 people and has resulted in positive outcomes like improved fairness and reduced fees and friction.”
The Separation Guide is calling upon groups such as Women in Super, health insurers and employers of choice to support this initiative. As a social enterprise, The Separation Guide has committed 10% of profits to digital transformation initiatives to streamline and improve separation and divorce outcomes for our community.
To find out more, get in touch with The Separation Guide today.
