Women are contributing less each year to their KiwiSaver account than men, leading to poorer retirement outcomes. And while there are many reasons for the gap, there are also ways to close it, says Laura O’Reilly, Wealth Adviser Lead at Fisher Funds.
The causes of the gap
Research from Te Ara Ahunga Ora Retirement Commission earlier this year showed there was a 36% gap between the amount men and women are putting into their KiwiSaver account each year, with some key factors at play, says O’Reilly.
This includes women working less – with a 67% labour force participation rate compared to around 76% for men – thus having less to invest into KiwiSaver, and less to gain from employer and government contributions. Women are also still paid less overall, with the most recent research from Stats NZ showing an 8.2% gender pay gap, which is even larger for Māori and Pacific women.
Women are more likely to take on part time work or unpaid caring responsibilities, and more likely to be affected by career gaps or changes due to parenthood, often finding it difficult to re-enter the workforce at the same level.
Many women stop their KiwiSaver contributions while on parental leave, meaning they also miss out on the annual government contribution.
“Studies also show women have lower confidence with KiwiSaver and investing, and are either holding onto cash rather than investing, or investing less in the stock market generally,” says O’Reilly.
Ways to close the gap
Knowledge is power, and there are lots of tools and resources to learn more about investing and develop confidence, some of which is targeted specifically at women.
This includes the Sorted website, which has articles and tools to help you start planning your future and podcasts focused on women and investing, eg Girls Who Invest.
It’s also important to talk openly about money, says O’Reilly, and she urges everyone to have an open conversation with their partner and tackle problems together. For example, if you can invest $20 a week you will get the maximum government contribution of $521*.
“If you are planning to go on paid parental leave, review your budget and if possible, try to keep up your KiwiSaver contributions. If you continue to contribute at least 3% of your parental leave payments, the government will now also contribute 3%. You should also check your employer’s parental leave policy – some may continue your KiwiSaver contributions while you’re on parental leave.
“While you may not be able to completely control how much you can work or what you’re paid, what you can do is be really smart and strategic about what you invest, to make sure your KiwiSaver investment is working as hard as possible for you.
“If you can contribute a regular amount to your KiwiSaver account, even if you’re not working, it will make a big difference. Small amounts can really add up over time due to the power of compounding.”
Do a KiwiSaver Health Check
As part of your financial planning, it’s also a good idea to check in on your KiwiSaver account each year. Check you’re in the right fund and use some of your KiwiSaver provider’s tools and calculators to see if you’re on track to reach your goals. You can look at your contribution rate to see what a difference it could make if you put just a little more in each month.
To chat in person with an expert, contact your KiwiSaver provider and arrange a time to chat with a financial adviser.
*Other eligibility criteria apply.
Join over 500,000 ambitious Kiwis with Fisher Funds, New Zealand’s most trusted KiwiSaver provider*. Just visit www.fisherfunds.co.nz/kiwisaver
Fisher Funds Management Limited is the issuer of the Fisher Funds KiwiSaver Scheme and Fisher Funds TWO KiwiSaver Scheme. Fisher Funds Wealth Limited is the issuer and manager of the Fisher Funds KiwiSaver Plan. Product Disclosure Statements for the schemes are available on our website.
*Reader’s Digest Most Trusted Brand for KiwiSaver (as voted by New Zealanders) 2021, 2022, 2023, 2024.
This content was sponsored by Fisher Funds.
