Australia: Don't be a 'poor' mum

With almost half of all new mothers now aged in their 30s¹, women are being urged to use their extra time in the work place to ensure they are financially prepared for the future.

Navigator's general manager of distribution, Paul Northey, says women making the choice to have children later in life should use their additional working years to ensure they are financially prepared for retirement.

"Women who decide to delay motherhood can limit this looming hole in their superannuation by contributing additional funds while they are still working. Many professional women are making substantial amounts of money and by contributing some of this to their superannuation they would be guaranteeing themselves a more comfortable retirement," said Paul.

There are obvious financial issues attached to raising families. Due to maternity leave, child rearing and part-time work, many women may find that at the end of their working life they have significantly less superannuation than their partners. Projections show that by the year 2030 the average woman's superannuation fund will be just A$90,000, only 70% of an average man's².

A major concern cited by women considering motherhood is lack of income during time off work. Over the past year, government- sponsored paid maternity leave has been touted as a possibility, however the recent Federal Budget dumped this option, concentrating instead on defence, security, education and health³, with no specific concessions for working mothers such as government-sponsored paid maternity leave.

New dads can also contribute to supporting their partner's ongoing superannuation balance by utilising highly tax-effective "spouse contributions".

Families where one spouse isn't working will also find they are able to contribute A$3,000 per annum to the non-working party's superannuation fund, and receive an 18% taxation rebate for the contribution.

"Women who are looking at their long-term choices should make an appointment to see an independent financial adviser who will help them create a robust financial plan for the future," said Paul.

And, women can make a big difference to their superannuation by simply contributing an extra A$20 a week during their working years.

"That extra A$20 a week, invested for over 20 years, with an average compound interest of 4.5% pa (net), will be worth over A$30,000⁴ – that's an extra A$45 per week to spend for up to 20 years of retirement.⁵"*

"Those extra funds will mean a lot to the mums in later life. For aged parents, it might also mean the difference between an independent retirement and becoming a financial burden on their adult children in later life," said Paul.

Paul Northey is available for interview.

For further information, please contact:

Simon Morgan
Group General Manager Public Affairs
(03) 9829 8892
0407 966 632

¹Australian Bureau of Statistics, Many women are delaying motherhood, Canberra, November 2000.
²Kelly, S., Percival, R., & Harding, Women and Superannuation in the 21st Century: Poverty or Plenty? National Centre for Social and Economic Modelling, University of Canberra, July 2001.
³"Costello unveils $2bn tax cut surprise", The Age, p.1 14 May 2003.
⁴Projection calculated by Norwich Union Life (Actuarial).
⁵For 20 years: Life expectancy at age 65 – males 16.21 years; females 19.88 years – Source: Australian Life Tables 1995-97.

* Contributions from your “after-tax” pay are not taxed when paid into super and when you get them back. The treatment of “salary sacrifice” contributions is more complicated – talk to your Adviser!

Note to editors:

• Norwich Union Australia is a group of two specialist financial services companies; Navigator and Norwich Union Life. Portfolio Partners, the Australian funds management arm of Aviva plc, is a sister company to Norwich Union. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
• Globally, Norwich Union Australia is part of Aviva plc, the world’s seventh largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
• Aviva is the worlds seventh-largest insurance group and the biggest in the UK. It is the leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$77.3 billion, and more than A$593 billion of assets under management (as at 31 December 2002). The group has more than 59,000 employees and 25 million customers worldwide.
• This document does not contain all the terms and conditions attaching to product benefits and options. For a full list of terms and conditions please refer to the Offer Document. A policy for insurance cover or an application for an issue of an interest as described in this document can only be effected after completion of the application form contained in a current Offer Document for the product.
• The information in this document reflects Norwich Union's understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended, to be comprehensive or a substitute for professional advice on specific circumstances.
• The securities advice or information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.