The gender savings gap is real, and women in the workforce need to be more engaged in their KiwiSaver plan for a better financial future.
KiwiSaver is a long-term savings scheme, designed to help set you up for later in life. The longer you have and contribute to your KiwiSaver account, the better.
KiwiSaver launched in 2007; the Te Ara Ahunga Ora Retirement Commission (TAAO) calculated that a 20-year-old woman earning the median wage for her age, and consistently contributing to a KiwiSaver conservative fund since then, could have built up a balance of close to $50,000 over the past 15 years.
However, the reality is that 40% of all KiwiSaver accounts have balances of less than $10,000, and the average balance for a woman is lower than a man across most ages.
For example, while the average KiwiSaver balance for a female is $27,061 for a male the average is $32,553 (source).
The widest gap between men and women is among those in their 40s and 50s. Women in their 40s have about $10,000 (or 30%) less in their account than men, while women in their 50s are down about $13,000 (or 32%). With some focus and positive changes, women can create some big rewards for themselves later in life.
KiwiSaver through a female lens
Women tend to have much different work/life experiences than men. They may take 10-15 years out of the workforce to look after children or elderly parents.
Additionally, women tend to select lower-risk, lower-growth fund options, which is not always to their advantage.
According to the Money and You report from the Financial Services Council (FSC), women struggle to talk about their finances, and many enrolled in KiwiSaver are not familiar with their KiwiSaver fund options, and which one might be the best for them.
Empowering women to be more financially literate is the key to help Kiwi women achieve long-term financial security goals.
Empowering women to be more financially savvy
The first step is encouraging women to take a more active role with their finances and seek advice if they are not sure about their options.
"Many new employees are defaulted to a balanced fund, but everyone should take the oppotunity to learn about their options and make an active decision about what fund they want to be in." says Generate KiwiSaver adviser, Kirstien Taylor.
"We also encourage all KiwiSaver members to review their fund and contribution settings every year or so, to make sure they’re still right for their situation."
"I’m very passionate about empowering women to understand their KiwiSaver investment and how to make it work for them and their families. We encourage women to be brave and consider growth funds (if right for their circumstances) and contribute more than the default 3% rate."
Taylor says women who’ve been out of the workforce and KiwiSaver should reach out to an adviser to learn about their KiwiSaver options, as there are some exclusive incentives they could still qualify for. For example, the $521.43 Government contribution is available* if you deposit at least $1042.86 into your KiwiSaver account each year – and it’s a bonus you won’t get with any other investment.
“It’s possible to qualify for this bonus even if you’re taking time off work, as you can make a voluntary contribution for the minimum amount.” says Taylor.
Taylor says women should talk to an adviser or try a KiwiSaver calculator to look at all their options and see how different fund choices and/or contribution rates could impact their KiwiSaver balance over the long-term.
Find out more
Talk to a Generate KiwiSaver adviser about your KiwiSaver investment or use our KiwiSaver calculator to see how you could be better off with some simple changes to your contributions and profile.
Disclaimers: No part of this blog is intended as financial advice; it is intended as general information only. To see our Financial Advice Disclosure Statement, please see Generate FAP Disclosure Statement. For more information about the Generate KiwiSaver Scheme please refer to the Generate KiwiSaver Scheme Product Disclosure Statement. For more information on Generate Managed Funds please refer to the Generate Unit Trust (Managed Funds) Scheme Product Disclosure Statement or the fund updates. The issuer of both schemes is Generate Investment Management Limited and the Product Disclosure Statements are available at generatewealth.co.nz/pds. Past performance is not indicative of future performance.
*Eligibility criteria applies for the Government Contribution, see details here