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Tackling the Gender Retirement Gap

Women typically have far less retirement savings, a lower quality of life, and less independence in their golden years, but there is a solution, writes Ben Tutty.

19 March 2023

When my nana got a part-time job working in a dairy she and grandad had the fight of the century. The family needed money, but my mum says grandad was distraught.

“He felt it showed he couldn’t provide for his family and thought that my nana should be at home cooking and doing the housework. Jean put her foot down and ended up loving that job.”

Later in her life my mum took 15 years off to raise my sister and I, saying the expectations were a little less rigid but they were still there: “It would have been very unusual for your dad to stay home. Honestly, we never really imagined it could have been different.”

Just like my mum and nana, several generations of Kiwi women have lived with the same expectations and gender roles.

You may think those expectations don’t exist anymore but the numbers prove otherwise. In fact, globally women do an average of 4.2 hours of unpaid work each day while men do just over one hour, according to Asia-Pacific Economic Cooperation research.

In fact, if women were to be paid minimum wage for their extra unpaid labour they would pocket almost $20 trillion a year (that’s 9 per cent of global GDP).

A problem for us all

The end result of these disparities is that women spend less time in paid work; they’re paid less when they are working; and they’re typically able to save much less.

This causes a gender retirement gap, meaning women typically have far lower retirement savings balances (and thus lower quality of life in retirement and less independence).

Dr Pushpa Wood, Director Financial Education and Research Centre at Massey University, says this isn’t just a problem for women.

“If women earn less for doing the same work it’s not their fault. If women are expected to do more unpaid labour, it’s not their fault. If women are able to save less for retirement as a result, that’s not their fault either.

“This is not a gender issue, this is an international, societal, cultural issue. If it’s a problem for women, it’s a problem for all of us.”

Wood says these disparities can lead to several negative outcomes for women such as decreasing their independence and making them more dependant on their spouses.

“I’ve met many women for whom staying in a relationship isn’t conducive to growth, but financially it’s difficult to leave. This can make them more vulnerable to exploitation and abuse.

“If you have two members of a household and one is constantly disadvantaged, how can that household operate in a healthy way?”

We know there’s a gender retirement gap, but how big is it exactly? Statistics from Te Ara Ahunga Ora (the Retirement Commission) show that men at retirement age (60-65) typically have KiwiSaver balances that are 27.1% higher than women of the same age.

A higher proportion of women also retire with no savings, according to Suzy Morrissey, Director of Policy at Te Ara Ahunga Ora.

“Around half of all women are living off their super alone in retirement compared to around one third of men. That’s why super is so important for women.”

Career progression

Morrissey explains that while traditional gender roles that cause these disparities are changing, they still exist.

“It’s mostly women who take time off to look after a child. They take around 98 per cent of parental leave and often work part-time or don’t work at all for long periods.

“On the other hand, men’s labour market participation is barely affected by having a child. That means women fall behind in career progression and often don’t contribute to KiwiSaver while they’re taking time off.”

Interestingly the gender pay gap is widest between the age of 41-45 at 16.7 per cent, which may be when many women are typically returning to work after a long break to raise children. The gender retirement gap then rises sharply, peaking between the ages of 51-55 at 33.5 per cent and shows that the two are closely linked.

The gender retirement gap isn’t something that women can solve on their own, according to Clarissa Hirst, Head of Content, Communications and Marketing at the Financial Services Council.

“We as women can take small steps, but without significant change at a policy and societal level, I don’t think we are going to shift the dial.

“The way KiwiSaver is set up makes it most beneficial to those who are employed throughout their lives, and don’t take breaks to undertake unpaid work or go on parental leave.”

With that said, Hirst adds there are things women can do to make improvements for themselves.

“Start talking about money with friends and whānau. Look into your KiwiSaver and learn about where you’re investing and how much. Talk to a financial mentor (they’re free) or a financial adviser.

“If you’re preparing to go on parental leave, talk to your employer about your KiwiSaver contributions. Most won’t continue to pay them during mat leave but some, like Z Energy, are starting to and asking the question might make them consider it.”

As Hirst says, while women can make small changes for themselves it’s been heartening to see institutions taking this problem seriously at recent FSC conferences.

“Any significant change is going to need to happen at a macro level. We’ve got KiwiSaver industry leaders talking about what potentially needs to change with KiwiSaver at the moment … I’m hopeful we can reach a point where KiwiSaver is an equitable retirement scheme for all New Zealanders.”

Bigger boat, bigger ideas

When a gigantic great white started attacking their vessel in the film Jaws, Martin Brody yelled, “You’re going to need a bigger boat”. The same can be said of the gender retirement gap. It’s a huge society-wide problem and if we’re serious about solving it, we’re going to need bigger ideas.

Morrissey says there are a few things we could change at policy level.

“Independently paid parental leave for each parent is one thing. This would mean the father has leave that only they can use so that they take time off and get into the swing of that caring role.”

Reducing the cost of childcare could help, as could the government or employers continuing KiwiSaver contributions when people take time off to raise children. These changes could make a real difference but ultimately, Morrissey adds, it’s our culture and society that needs to change.

“These things are complementary but they don’t get to the core of the problem. Ultimately we need to be more supportive of people who make different decisions and say ‘good on you’ to men who decide to be the primary carer.

“Employers should be just as open talking to males about reducing hours or taking time off for childcare. How that’s received and supported in the workplace and within our families plays a big part.”

The expectation around who takes care of a child needs to shift so that it becomes normalised that men do as much as women. Conversations around who will be a child’s primary carer need to start on equal footing and these changes need to happen on an individual level, a household level.

Remote working could also be another factor that helps bridge the gap.

“Flexible working and working from home allows women to participate in more paid hours of work and as we move forward it could support women’s ability to choose how much they work.”

Changing the very nature of our gender roles, the way our families are structured and the composition of our workforce sounds like a big job, and it is, but Morrissey reckons it’s achievable.

“We’ve had an enormous amount of social change in the past, whether it’s legalising same sex marriage or giving women the vote. The gender retirement gap is one of those problems that seems intractable, but the past proves we are capable of making major changes.

“And if all of us don’t start thinking about making changes now this is how it will always be.”

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