The report released earlier in July by Te Ara Ahunga Ora Retirement Commission is showing that the gender gap in retirement savings is going in the wrong direction in New Zealand. It highlights that there is a 25% gender gap on average KiwiSaver balances, up 5% in one year from the 20% gap identified in 2021.
Worryingly, the research showed that gender gaps in every age category widened, with larger gaps opening in younger ages groups, up 7% for 18 to 25 year olds (now 23%) and up 8% for 31 to 35 year olds (now a total 27% gap).
Additional analysis was carried out to understand the impact of significant hardship withdrawals, first home purchase withdrawals, and savings suspensions. Withdrawals and suspensionKiwiSaver - the gender divide growss did not explain the differences - more men were on suspensions and had withdrawn more money.
The large gender gap can be explained because KiwiSaver is linked to paid work. It disadvantages women who are more likely to move in and out of paid work to care for family members. Other contributing factors are also likely to be that women continue to earn less than men and are more likely to be engaged in casual and part-time work.
The statistics are even worse when ethnic differences are examined. The ethnic pay gap further influences women’s hourly earnings, with Pasifika women earning 72cents to each $1 for Paheka men, and Māori wahine earning 75cents.
The gender and ethnic differences have resulted in lower KiwiSaver balances for women and can have a significant impact on the retirement for women; which is compounded as women on average live longer than men and need to fund their retirement for longer.
This gender gap is also confirmed across the ditch. Research released earlier this year by the Australia Institute’s Centre for Future Work shows that women in Australia earn $1million less on average over their lifetimes than men and retire with $136,000 less in superannuation.
It found that women earning the median wage would accumulate about $AUD393,676 in superannuation, $AUD151,000 below the level defined as a “comfortable retirement” by the Association of Superannuation Funds of Australia. It reported that the gender gap occurs across all occupations and industries.
In Australia, men have higher average salaries than women in 95% of all occupations, including those where women dominate the workforce. For example, women account for 99% of all midwives, and yet are paid on average 19% less. It is reported that there are about 80 occupations in Australia where men make up 80% or more of the workforce and that workers receive an average salary above $100,000. By contrast, there are no occupations in which women make up 80% or more of the workforce and pay an average salary above $100,000.
When an occupation or industry is affected by historical and persisting gender inequity issues, differences in pay can significantly limit retirement savings.
Likewise, periods or absence from the workforce to care for children can significantly limit retirement savings. While employers contribute to their employees KiwiSaver schemes, this does not extend to cover periods of paid parental leave. The overwhelming position remains with the mother being the primary carer, with only 1% of paid parental leave being taken by men. In addition to the parental leave issue, women also tend to take on more of the parenting load, which may involve giving up full-time work to work only casually or part-time to support the household.
The Association of Superannuation Funds Australia is calling for action to protect the retirement outcomes of Australian women who take time out of the workforce, including superannuation being paid while on parental leave and a $5,000 bonus payment into a mother’s super account per child.
In New Zealand, the Retirement Commission recommendations are to continue to address gender and ethnic pay gaps, occupational gender segregation and ensure KiwiSaver contributions are maintained during periods of parental leave.
Those recommendations should be taken as a given. Surely more proactive steps should be taken to ensure that the KiwiSaver gender divide does not continue to grow, resulting in a significantly negative impact on the retirement for women which is simply unjust. Read more....