Aversion to higher risk investment strategies hold women back from achieving higher long-term returns, according to Colonial First State Global Asset Management (CFSGAM).
The wealth management arm of the Commonwealth Bank (CBA) said risk adversity and lack of understanding and confidence were challenges that had a significant impact on women’s financial wellbeing.
CFSGAM senior analyst, economics and market research, Belinda Allen said “this lower appetite for risk is important when placed in the context of lower super balances and the gender pay gap, which has widened post-GFC, and lower financial literacy, in general, compared to males”.
“… an aversion to higher risk investment strategies holds them back from the opportunity of achieving the higher long-term returns available from growth assets,” she said.
The bank joined the chorus of submissions into the Senate Standing Committee Inquiry into the economic security of women in retirement, and said superannuation and non-superannuation reforms were necessary to help bridge the gender gap in retirement.
Commenting, CBA group executive wealth management, Annabel Spring said: “Having not enjoyed the long-term benefits of compulsory super, single women in their early 60s are well short of the standard for a comfortable retirement.”
“The combination of lower financial literacy, lack of confidence in financial capabilities and challenges in the workplace means that women may be prevented from retiring comfortably,” Spring said.
“We believe that a package of complementary superannuation and non-superannuation reforms is necessary.”
The CBA submission’s key recommendations included:
- modifying concessional contribution caps;
- undertaking further research on retaining the low-income super contribution, and the removal of the $450 super guarantee;
- introducing consistent tax deductibility for advice;
- extending the Paid Parental Leave scheme to include super payments;
- continuing the National Financial Literacy Strategy; and
- removing regulatory barriers impeding the cost effective development of income stream products which address longevity risk.
