Women are ending up with less in their KiwiSaver funds than male counterparts, according to a recent report.
The gender pay gap, unpaid labour and a lack of financial confidence are the three main reasons, says Sarah Whitelock from the financial group Mercer.
Women contribute less to savings funds simply because they earn less, Whitelock tells Jesse Mulligan.
“Generally, the way we save for our retirement is a factor [related to] our salaries and pay ... In New Zealand, women earn between 10 and 15 percent less than men. You put your money into KiwiSaver and it’s based on a percentage of your salary so when you’ve got less salary you have less going in.”
Then there's the fact that women generally work fewer paid hours than men.
“Women tend to be in industries that pay less – industries that tend to have the word 'care' associated with them.
“They’re often also – and this bit is quite alarming – paid less for the same role. It's a brave conversation to have with your employer but it’s one worth having. ‘Am I being paid fairly compared to my male colleagues? I think all women could do that, but it’s a bigger issue than that and it’s going to take a while to fix.”
"Women are more likely to take career breaks to look after kids or elderly relatives ... and then they’re more likely to work part-time. About 1 in 3 females work part-time, whereas about one in 10 males do. So once again if you’re working less, you’ve got less money going into your KiwiSaver balance."
Finally, in general, women are a bit more hesitant than men about making financial decisions, Whitelock says.
"This is interesting because if you look at who controls household spending it tends to be women. Eighty percent of [domestic] decisions are made by women.”
The first two contributing factors are sociological and therefore hard to address, she says, but the third is less difficult.
Women could look for ways of still paying into their KiwiSaver funds while on a career break or working part-time for a period, she suggests, or giving it a boost when they return to full-time work.
A more conservative approach to investing doesn't always serve women well in the long term, Whitelock says.
“Generally, if women could move a bit further up that risk-return spectrum, that’s going to be helpful for them in terms of their long-term savings.
“Most KiwiSaver providers will have a digital tool you can use and answer some questions and guide you towards which investment option would be suitable for you. Most providers will also have people you can talk to, they have a financial advice team or nominated representative.”
Women are not necessarily less financially literate than men, she says, but they do tend to be more hesitant when making investments.
“We did a test of a bunch of customers a number of years ago, asking quite basic questions about KiwiSaver and actually the women answered more correctly than the men. So sometimes it’s not that there’s financial illiteracy… I think sometimes it’s a lack of confidence or hesitancy.”
When making financial decisions, women do best to maintain a degree of independence regardless of their relationship status, Whitelock says.
“Generally, KiwiSaver forms a part of relationship property so if a relationship is to break up that should be taken into consideration. But then you also get into issues when relationships break up for future earning power and those types of things. It’s always good to look at yourself as an individual, even if you’re in a relationship.”