Men on average had a 25 per cent greater KiwiSaver balance than women as of the end of last year, according to the Retirement Commission.
The KiwiSaver gender gap increased 5 per cent from the same research a year prior.
“I didn’t expect to see the gender gap grow so much in such a short period of time,” said Dr Suzy Morrissey, director of policy and research at the Retirement Commission.
“It’s not a healthy trend, it’s not something we’d want to see continuing.”
“This research builds a picture of the challenges women face to grow their KiwiSaver balances.”
The research found gender gaps in every age group category widened, but of particular concern, Morrissey said, was that gaps were appearing, and widening, at such a young age group.
For those aged 18-25 years old, the KiwiSaver balance gap grew 7 per cent in favour of men, with a total gap between the two sexes now at 23 per cent.
On average, men aged between 31-35 had a 27 per cent greater KiwiSaver balance than women - up a further 8 per cent in 2022 compared with the previous year.
The widest gaps remain between men and women in their 40s and 50s.
On average, women in their 40s have approximately $10,000 (or 34 per cent) less in KiwiSaver than men, a figure that rises to approximately $14,500 (or 37 per cent) less for women in their 50s.
“The widening of the gap at younger ages is particularly concerning because of compounding interest. Money invested earlier will have time to grow, but if women’s balances are lower than men’s in younger life, they will likely remain lower,” Morrissey said.
“Lower KiwiSaver balances have a significant impact on retirement for women, who on average live longer than men and need to fund their retirement for longer.”
The Retirement Commission engaged consulting actuaries firm Melville Jessup Weaver (MJW) to collect data as part of the research, which covered 3,058,230 KiwiSaver members - representing approximately 94 per cent of the total KiwiSaver member base - with total balances of $83.73 billion as at December 31, 2022.
It’s the first time the Retirement Commission has had gender desegregated data, Morrisey said.
So what’s behind the widening KiwiSaver gender gap?
“Analysis of the widening gap does not appear to be explained by fund choice, withdrawal, or suspension behaviour of women compared to men,” Morrissey explained.
Instead, the combined impact is likely reflected in things like the gender pay gap, time out of paid work for women (maternal leave or raising children), and the higher percentage of women than men who work part-time.
“One-third of the women who are in paid work actually work part-time,” Morrissey said. “We’ve got very high rates of part-time work in New Zealand compared to the OECD average.”
“When you’re paying KiwiSaver as a percentage of your earnings, it’s obviously less going through into your KiwiSaver account.”
In 2022, the national gender pay gap was 9.2 per cent between men’s and women’s median hourly pay, according to Ministry for Women data.
Women’s participation in the workforce is the highest on record, according to Stats NZ, with the March 2023 quarter seasonally adjusted labour force participation rate for women increasing to 67.7 per cent. This compares to a labour force participation rate of 76.4 per cent for men.
Morrissey said achieving parity would be a challenge while structural differences between men and women remained.
But resolving the gender pay gap and the levels of part-time work between men and women is a starting point to bridging the KiwiSaver gap.
“In terms of what women can do to look after our own KiwiSaver, that’s very much about thinking about whether we can continue to be making KiwiSaver contributions while we are out of paid work or in reduced hours,” Morrissey said.
“Certainly we were pleased to see the Government making the employer matching [the] contribution for women on parental leave... that goes some way to supporting [them].
“Obviously there are other women who are on parental leave who might not be able to keep up their KiwiSaver payments, and then they won’t be getting anything from the Government in terms of matching, so there are other things that could be done at the Government level.”
“One of the things we suggested [in our Review of Retirement Income Policies last year] was that the Government could pay the Government contribution even if somebody on parental leave hadn’t made sufficient contributions... just to provide some level of support for people on parental leave.”
Poor financial market conditions wiped billions off KiwiSaver assets in 2022.
The average KiwiSaver balance as at December 31, 2022 was down 5.7 per cent from the prior year to $27,379, MJW’s analysis found.
Last year’s rough ride for global financial markets included New Zealand’s benchmark S&P/NZX50 index falling 12 per cent.
KiwiSaver balances dropped across all ages, impacting everyone, according to the research.
However, for men, the average balance fell 3.2 per cent to $31,496 compared with women, who had a 7.1 per cent fall to $25,144.
Morrissey said there’s a bit more to try and understand as to why those differences are occurring.
“We know that it’s the balance size that tends to indicate the type of fund that people go into. By which I mean people with lower balances tend to invest in conservative funds, so it’s not so much split by women doing or men doing that,” she said.
The value of KiwiSaver assets fell from $90.2b to $86.5b over the 2022 year, according to Morningstar figures released earlier in the year.
MJW’s analysis also found many KiwiSaver members continue to have low balances.
At the end of 2022, 41 per cent of KiwiSaver members had a balance of less than $10,000.
While those over the age of 35 generally have higher balances, a quarter still had balances under $10,000.
And one in five KiwiSaver members aged 51–65 have less than $10,000.
“KiwiSaver’s only been around since 2007 so people have only had now approaching 16 years to have been investing, so haven’t had the whole of what we might describe as a working life,” Morrissey said.
“If people are concerned about their KiwiSaver balances [they could] consider their contribution rates.
“We know that two-thirds of people are contributing to KiwiSaver at the default rate of 3 per cent, but people could increase their contribution rate if they wanted to see an increase in their KiwiSaver balance, and similarly they can be thinking about the type of fund they’re invested in.”
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sport.
New builds of smaller homes won't cater for changing demands of older people.