Women need to contribute to their superannuation at more than twice the level of men in order to achieve the same sum at retirement, Australian Institute of Superannuation Trustees research has found. Institute chief executive Fiona Reynolds says women face three hurdles to their super savings.

"The key issues are the fact that women do earn less than men, that they have broken work patterns and that they live for longer than men do," she says.

If you have broken work patterns, perhaps because of child-rearing or carer responsibilities, that means you are missing out on super, she says.

"The reality is that super is linked to paid employment. And if you're in paid employment for 40 years you will have made up an adequate amount in your super but that's really a man's way of working, not a female's way of working."

Seventy per cent of part-time and casual roles in Australia are held by women, Reynolds notes.

Alicia Walsh has been out of full-time employment for four years to have children. Walsh, 42, began her career working for various companies in the film industry and collected several super funds as she changed jobs. Thirteen years ago she decided to set up her own company working as a television writer.

"My accountant advised me to set up a super fund and make direct-debit contributions every month regardless of how much I earned," she says. "When I had kids I stopped earning money because when you're self-employed there is no paid maternity leave. But I had a really good habit of putting money away, so I kept up the direct debit for the first year after having kids."

Walsh couldn't afford to continue her monthly super payments after the first year but she has taken advantage of the Government's co-contribution scheme to top up her account.

"In June I see how much money I have in my bank account and I put it all in my super," she says.

Walsh is grateful for the financial advice she received when she was in her late 20s.

"My accountant was making me think about my future and the fact that there would be years I might leave the workforce to have kids or maybe not have a partner," she says. "It's about making yourself as independent as possible."

Her only wish is that she had started adding more to her super at an earlier age.

"My partner has five times as much super as me because his super was really regular from an early age, so it has just compounded over the years," she says. "It's not necessarily that he's paid in more than me. It's because he started earlier, so there's more interest."

Colin Lewis, from financial advisers ipac, says one of the most important lessons in super savings is the power of compound interest (see graphic, right).

"Compound interest is basically where you are earning interest upon your interest," he says. "The principle of compound interest means the earlier you start, the more you will accrue. It adds up over time. The earlier you start, the more effective it is - that is the power of making your money work for you."

The more money women can save before temporarily leaving work, the more their interest will continue to accrue in their super even if they stop contributing.

It is a beneficial strategy for women to contribute as much as they can before they step away from the full-time workforce but Lewis says this is not always possible.

"It's always difficult to say you should put more money into super," he says. "A lot of people in their 20s would say, 'I'd rather do other things. I'd rather pay off my mortgage.' But you should do something. As a minimum their compulsory super has to go in and if they can qualify for the Government co-contribution they should."

The co-contribution scheme is set up so that people earning less than $30,342 will receive $1.50 for every dollar they voluntarily contribute to their super fund, capped at a $1500 contribution from the Government. The percentage of co-contribution tapers down for people earning up to $60,342.

"Technically it is the best return on investment you can get," Lewis says. "You put a dollar in and the government pays you $1.50. That is the best thing you can do. More women than men can qualify for it if they are on a lower salary."

Laura Menschik, a certified financial planner and the managing director of WLM Financial Services, recommends this co-contribution scheme to anyone who can afford it and says another possibility for women who temporarily leave the workforce is the Government's "spouse contribution rebate".

If a woman has an assessable income of $10,800 or less (including reportable fringe benefits) and her husband contributes up to $3000, the couple will receive a rebate of 18 per cent against their tax return for that year. A percentage of the rebate is available for assessable income of up to $13,800.

However, in reality the co-contribution scheme and spouse contribution rebate are out of reach of many single-income households, Menschik says.

"These are just little ways of getting a bit extra into your account, or if you're on a low income, that's just a little bit to help," she says.

"That can add up over the years but you find that when a woman has taken time out to raise a family, there isn't the money to put into super."

SuperRatings managing director Jeff Bresnahan advises there are a couple of factors women should be aware of to improve their balance.

"Low fees is an obvious one," he says. "As a rule of thumb, if you've got around $50,000 in your account, you shouldn't be paying more than 1.5 per cent on your total fees. If you have over $100,000, you shouldn't be paying more than 1 per cent.

"The other would be insurance. Maybe they do need insurance, maybe they don't. You need to understand what insurances are provided for in a fund and what they cost. If you pay for insurances that are irrelevant, that will whittle down your account balance. Even if you're not in the workforce, you're still paying for it."

Having an appropriate investment strategy will have a huge impact on your ultimate super returns, Bresnahan says.

"If you are under 50, you have at least 10 to 15 years to retirement and probably another 15 years past retirement. That's 30 years in the system, which is more than enough time to go through a whole lot of market cycles.

"Volatility often upsets people but long-term returns will generally be better than a more conservative approach."

Bresnahan says the recent poor returns from super funds need to be kept in perspective.

"People are jumping up and down about bad returns but the reality is we've had four years of great returns, up to 60 per cent," he says. "You need a long-term investment strategy. A very conservative approach over 20 years will cost them a lot of money in retirement."

The Government is taking submissions on the adequacy of super and age pensions.

The AIST has made proposals that address the imbalance women face because of broken work patterns and their over-representation in part-time and casual work.

Reynolds says the institute would like to see super entitlements linked to both the baby bonus and paid maternity leave.

The institute would also like to see the removal of the $450 threshold on employer-paid compulsory super contributions because it reduces access to super for part-time and casual workers. Reynolds is pushing for higher compulsory contributions.

"The superannuation scheme was always designed to go to 12 per cent and we'd like to get back to that plan," he says.

The original super scheme was an initiative of the Hawke-Keating government and was introduced in 1992 at 3 per cent of annual salary, with a plan to gradually increase this contribution to 12 per cent. The Howard government froze this at 9 per cent.

However, the initial research suggested super should reach 15 per cent to provide adequate retirement savings.

"We say that 15 per cent is where we need to get to over the longer term," Reynolds says.

The Government's report into superannuation and age pensions is expected next year.

The facts

Women live longer than men, earn less and spend less time in the workforce.

Average pre-retirement balance for men in 2007 was estimated at $90,080 versus $56,587 (source: Rice Warner).

About 50 per cent of women who have retired or will do so within the next 10 years have less than $20,000 in super.

Women need to make contributions to their super at more than twice the level of men in order to achieve the same level at retirement.

Source: AIST

A woman's worth

Colin Lewis of ipac has provided modelling to show the effect of compound interest on super savings and how women are affected if they choose to leave the workforce for either two, five or 10 years, either at age 30 or 35, compared with a man who has an unbroken work history.

This modelling assumes: a $50,000 salary throughout work history, indexed at 4 per cent; super guarantee of 9 per cent (15 per cent contributions and earnings tax has been taken out); and a super earnings rate of 8 per cent.