How the 'Super Baby Debt' eats away at a woman's nest egg

Having a family can create a 'Super Baby Debt' for mothers of up to $50,000 by the time they reach
retirement new research has found1.
The debt occurs when women suspend their normal superannuation contributions when they take two or more years out of the workforce to have children.
Over the life of their careers this can leave mothers up to $50,000 further behind men in the quest to ensure a comfortable retirement.
To overcome this problem, women should adopt 'The One Per Cent Rule' by adding an extra 1 per cent to their superannuation contributions for the rest of their working lives.
The financial drain on women is enormous, with almost 300,000 babies born in Australia every year, and many employed mothers taking time out of the workforce in the first 12 months after birth.
Suncorp Life Head of Superannuation Vicki Doyle joined Association of Superannuation Funds of Australia CEO Pauline Vamos in proposing that women should understand they have options when it comes to improving their retirement lifestyles and that Government had a role to play.
"The 'Super Baby Debt' can really eat away at a woman's nest egg, but women have the power to
overcome it by following 'The One Per Cent Rule'," Ms Doyle said.
"The Rule is that, for every two years out of the workforce, women need to make an additional 1 per cent contribution for the rest of their working life.2"
Table 1:

Current mother's salary Super Baby Debt (at retirement)

$65,000 $28,000

$85,000 $36,500

$115,000 $50,000

Scenario based on a woman, 32-years-old, two years out of the workforce (see footnote).

1 Calculated using the Super Guru Retirement Projector based on comparisons on three scenarios of a woman 32 years old, two years out of the workforce at salaries as follows: a) $65,000 salary (super baby debt $28,000); b) $85,000 salary (super baby debt $36,500); c)

$115,000 salary (super baby debt $50,000) compared to a woman 32 year old, same salaries and super balances, and no time out of the

workforce.

2 Assumes parental leave is taken from ages 32-33 and retirement at 65.

1

Media enquiries: Adam Connolly 0417 170 084



Contributing to the issue is the continued confusion, apathy and frustration felt by women as surveyed through the Suncorp-ASFA Super Attitudes Survey 20123.
Findings show women feel the superannuation system is overly complicated and alienates them from their retirement planning, with: