When Anthony Albanese was voted in as Australia’s prime minister in May, the first words of his victory speech promised a better future for the country’s marginalized Indigenous people. There is plenty of work to do. “Generation after generation of Aboriginal children were forcibly removed from their parents and brought up outside of culture, outside of language, and in many ways provided almost a slave workforce,” said Linda Burney, who on June 1 became the first Indigenous woman to be appointed minister for Indigenous affairs, in a Bloomberg TV interview. “Those things impact on today. You cannot divorce the past from the present.”
Two stark examples of this legacy are a yawning wealth gap that sees Aboriginal and Torres Strait Islander people retire with about half the savings of other Australians, and shorter life expectancies that give them less time to enjoy retirement.
Australia’s mixed public-private pension system is often held up as a model for the rest of the world. It combines a government-funded pension—which is means-tested, so wealthier people don’t receive one—with tax-advantaged savings plans called superannuation funds. “Super,” as that program is nicknamed, is similar to a 401(k) in the US except employers make mandatory contributions of about 10% of an employee’s salary. The funds have built up significant nest eggs for many Australians and have helped the country’s pensions industry grow to A$3.4 trillion ($2.4 trillion) in assets.
But because super is based on a person’s earnings, a lifetime’s worth of inequality flows through to retirement savings as well. The country’s Aboriginal people were given the right to vote only in 1962, and many worked for employers that stole part or all of their wages, leaving little to pass on to their families. Those now at retirement age are part of a generation in which children were legally kidnapped from their parents as recently as the 1970s. Poor health and working prospects have persisted. Only about half of prime working age Indigenous people are employed today, according to government data.
There is “an inequity in the design” of the system, says Michael Dockery, an associate professor of economics at Curtin University in Perth. “Anyone in that situation, with poorer health and lower incomes and lower participation in the labor market—this system is inequitable towards those groups.” Dockery was the lead author of a 2020 report that found that about two-thirds of Indigenous Australians have retirement incomes below a “modest standard” of living, compared with less than half of non-Indigenous people. The paper, which was commissioned by pension manager UniSuper Management Pty Ltd., also found that Indigenous people aged 65 to 74 had average superannuation fund balances of less than A$100,000; non-Indigenous Australians had nearly A$200,000.
The companies that manage the bulk of workers’ savings haven’t come up with a collective plan to address these shortfalls, though individual funds are trying to make their plans more accessible. Many also told Bloomberg that they don’t necessarily know who their Indigenous clients are. While one or two funds directly ask members if they identify as First Nations people, most get only the details given by employers.
“If we have a different level of wealth, then of course all the other outcomes are going to be unequal,” says Adam Davids, an Aboriginal Australian who has worked for more than a decade to further the careers and educational prospects of Indigenous people. He’s now the chief executive officer of First Nations Equity Partners and set to launch a fund this year whose investment criteria will include a ranking of the nation’s largest companies on Indigenous issues. “We really need the pension industry to help divulge Indigenous wealth data so that we can understand the starting point, identify root cause issues including where and why Indigenous Australians might have lower rates of wealth. Then we can establish a more informed solution.”
So far, much of the discussion around pensions and Australia’s Indigenous people has focused on how the money is invested. In 2020, the mining giant Rio Tinto Group blew up a 46,000-year-old Aboriginal heritage site so it could access high-grade iron ore. Australia’s pensions, which are some of Rio Tinto’s largest investors, were among the loudest critics and helped force resignations of three senior executives and a boardroom clean out. Since then, funds have urged companies they invest in to improve ties with Indigenous communities that host their operations.
To address the saving gap, the Curtin University report says the government could consider raising the basic state pension, on which Indigenous people rely more, and paying for this by reducing some of the tax benefits from super for high earners. It also raises the possibility of allowing Indigenous people to access their savings at a younger age in order to account for lower life expectancies. The report estimates that 19% of today’s young Indigenous males and 12% of females will pass away before age 60, when they can begin accessing their savings. The comparable figures are 7% for non-Indigenous men and 4% for women.
AustralianSuper Pty Ltd., the nation’s largest pension fund, has said it will lobby the government to allow Indigenous workers earlier access. Australian Retirement Trust Pty Ltd., its closest competitor, said in a statement it was committed to advocating for better retirement outcomes for First Nations people, and will continue to review its processes.
Some funds, including Cbus Super, for workers in the building trades, and Hesta, for those in health care, maintain dedicated phone lines for members who identify as Indigenous Australian. They also allow alternative methods of identification for Indigenous people who lack such conventional documents as a driver’s license. UniSuper said on June 6 that it was helping to back a project that assists vulnerable First Nations people in registering for and obtaining birth certificates.
Australian Retirement Trust and Hesta say they send representatives into remote communities to help reunite First Nations people with long-dormant savings accounts set up by former employers. These funds and others support the First Nations Foundation, which helps teach Aboriginal workers about the financial system and how to build and access retirement savings. “It could significantly increase the quality of life,” says Phil Usher, an Indigenous man who is CEO of the foundation. “Stuff you take for granted on a higher income, it’s really significant.”
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