A recent report by the New Zealand Institute of Research has found the average women’s KiwiSaver balance is 20% lower, compared to the balance for men.
The research commissioned by Kiwi Wealth assessed the potential drivers of this KiwiSaver inequity among women in New Zealand. It discovered four common contributing factors: the gender pay gap, labour force participation, career gaps because of motherhood, and low confidence and knowledge of KiwiSaver.
The report indicated inequity in retirement is a common theme for women. In general, a woman’s career experiences more disruptions than men for several reasons. These included childbearing and parenthood, returning to work part-time or in a role with less responsibility after having children, and fewer opportunities for career development because employers feel uncertain about future children.
Women are less likely to participate in pension funds that yield a higher return, because of a lack of confidence or knowledge associated with how KiwiSaver works, states the report. This was even more significant for Māori and Pasifika women. For many women, their knowledge of investment grows with age, however, these early decisions can have a profound effect on any long-term savings.
The report makes several suggestions for government and business that could help improve KiwiSaver outcomes for women. These include addressing the gender pay gap by introducing legislation that requires pay transparency, developing policies for KiwiSaver that allow for continued payments while on maternity leave, and partnering with KiwiSaver providers to improve the financial literacy of women.