My husband and I are members of the same superannuation fund and we both hold insurance through it. But when our statements arrived last year, we noticed that my life insurance premiums were almost $3 a week higher than his, even though my sum insured was much lower.
Looking more closely, we realised the discrepancy was because my husband and I were in different occupational categories: he in the "professional" category; me in the "general" one. I’m a degree-qualified, white-collar worker, so I was perplexed. Surely I was entitled to be in the professional category too? But it wasn’t so straightforward.
Our super fund, CareSuper, has three requirements for members to fall into its professional occupational category: (1) Your job needs to be limited to an office environment and not involve manual labour, (2) You need to have a tertiary qualification/be in a management role, and (3) You need to earn more than $100,000 a year from your profession.
Although I met the first two requirements, the third was a sticking point for me: I haven’t worked full-time since my first child was born. As a part-timer, I earn much less than the required $100,000 a year. But if my income were annualised, I’d earn over the $100,000 threshold.
I wrote to CareSuper and they agreed to change my occupational category from general to professional, saving me over $5 a week in insurance premiums and boosting my languishing super balance by some $275 a year. When you consider compound growth, the effect is significant.
But while this is a pleasing outcome for me, what about other members in similar situations? Putting my journalist's hat on, I asked CareSuper if there was an actuarial reason why they don’t annualise earnings in order to determine whether members qualify for their professional occupational category (and therefore pay lower life insurance premiums).
I didn’t get a straight answer. Rather, CareSuper asserted that the risk of a claim for full-time office workers “might typically be lower” than for part-time workers, because it’s unclear what part-timers are doing when they’re not in the office. (Insurers, let me fill you in: when we’re not in the office, we primary carers are more likely to be schlepping kids to the park or doing the grocery shopping than going skydiving or bungee jumping. But surely you could validate this?)
Most insurance offered by super funds has a general category and a lower-priced professional category, though the criteria to qualify as professional can vary. Still, the discrepancy between actual and annualised earnings is likely to be a problem encountered by many parents who work part-time, not just CareSuper members. Statistically, this will disadvantage women because mothers in Australia are more likely to work part time than fathers.
I asked an independent expert for a second opinion. Life insurance actuary Nadine Brooks concedes “there’s an extra administrative burden” to verify a part-time worker’s annualised earnings, but can’t see any fundamental difference in the risk profile of a full-timer and a part-timer. Brooks strongly encourages the insurer “to analyse their claims experience for office workers and see if there’s any statistically significant difference between full-time and part-time workers”.
We all know that women are likely to retire with less superannuation than men. This is another example of how the odds are so frustratingly stacked against women trying to save for retirement. Equalising insurance premiums for full-time office workers and their part-time counterparts is one way to help close the gender gap in retirement savings.