Jo Cribb: Wake up call on gender gap in retirement savings

There needs to be measures to reduce gender and ethnic pay gaps to make it easier for women to save. Photo / 123RF

OPINION

None of us can stomach those stories about old people not having enough money to heat their homes or choosing whether to feed their cat or themselves.

As a nation, we’ve historically prided ourselves on ensuring our old folk are well looked after.

But data released from Te Ara Ahunga Ora Retirement Commission shows that many women are facing bleak retirements.

Women, on average, currently have $26,144 savings in their KiwiSavers compared with men’s $31, 496.

That’s 25 per cent less retirement savings. What is worrying is that the gap between men’s and women’s savings grew 5 per cent over the past year.

The clever data analysts dipped into the data to find that the gap had widened between all age cohorts, with the biggest gaps as we get older.

It’s not women’s saving behaviour driving the gap, though older women are likely to have more conservative funds, perhaps because they have smaller amounts to play with.

Something else is going on.

NZIER estimated the financial impact of a one-year break in retirement savings contributions is $15,100, something many women do several times for parental leave.

Should a woman take more time out to care for children, or work part-time, she could be missing out on between $58,000 and $318,000, compared with if she was in fulltime employment.

That’s a lot of cat food post-retirement.

Even if she is working fulltime, on average she will receive nearly 10 per cent less than the average man thanks to the gender pay gap.

Should she be Māori, that’s 19 per cent less, or Pacific a substantial 25 per cent less.

Whatever your attitude to ‘the motherhood penalty’ and pay gaps, 25 per cent retirement less savings for women will impact all of us.

Whether it’s your mum, sister, or daughter. Whether it’s you and the choices you will be able to make or not as you age. OCED firmly puts the burden on governments to level the playing field.

First, there needs to be measures to reduce gender and ethnic pay gaps.

Introducing compulsory pay gap reporting for medium to large employers would be a first step. This will reduce gaps by 20-40 per cent; a great start.

Then we need to get rid of gender-bias from policy.

The Government’s Budget announcement of matching KiwiSaver payments for those on parental leave heads in the right direction.

But only households with higher incomes will likely be able to keep up KiwiSaver contributions when they are an income down. The Government only expects one-third of eligible families to take it up, based on the $19.6 million they budgeted.

NZIER points to the role employers should play: addressing gender and ethnic gaps in their businesses, paying KiwiSaver contributions for those on parental leave, and offering financial planning services for employees.

We, all have a role to play too. We get to choose the next government soon.

None of us want the New Zealand we are hurtling towards of too many older women left poor in their retirement. Let this data be a wake-up call for all of us.

- Jo Cribb is a diversity, equity and inclusion expert who works in New Zealand and internationally on gender policy projects and diversity and inclusion strategies.