New Zealand’s largest bank and KiwiSaver scheme provider says there’s a clear gender divide across its KiwiSaver funds, with women losing out by thousands of dollars.
ANZ has found there is an almost $6,000 difference in the average balances of ANZ Investments’ male and female KiwiSaver members – despite contribution rates being similar amongst men and women.
The average KiwiSaver balance for men is $37,016, compared to $31,030 for women in ANZ’s KiwiSaver scheme, an almost $6,000 gap.
ANZ says the gap is higher than it was a year ago when the average balance gap between male and female members was around $5,500. It's nearly a 9% increase.
One of the contributing factors of this gap increase is the higher returns from the growth-oriented funds which ANZ says it sees more male members invest in.
For KiwiSaver members aged 64, the latest average savings gap between men and women is even higher, up around a $17,000 difference between men and women's average KiwiSaver balance.
ANZ currently has 650,000 KiwiSaver members, of which 51.3% of members are female.
Managing Director for ANZ Investments Fiona Mackenzie says women face a “twin challenge” when saving for a comfortable retirement.
Women typically live longer than men and need to save more for retirement than men do, but the gender pay gap makes saving more difficult.
ANZ data also shows a higher percentage of women choose more conservatively oriented funds, whilst a higher percentage of men opt for more growth-oriented funds.
The biggest gender divide can be found in ANZ’s high growth fund, where only one-third of investors are women compared to two-thirds men.
Women make up 46% in ANZ’s KiwiSaver growth fund and 50% in the balanced growth fund.
“Our customer figures show women and men are contributing to KiwiSaver at similar rates. However, over a lifetime the gender pay gap and a more conservative fund choice, means women tend to reach retirement with less money saved,” Mackenzie says.
Mackenzie describes these factors as “twin headwinds” that women face.
“Those two things combined mean that we really cannot afford to be conservative in terms of our fund choice,” she told interest.co.nz.
“Our young women seem to be more comfortable than older generations, so they're taking a bit more risk. But I still think it's something we've got to keep challenging ourselves [on] when it comes to that KiwiSaver balance gap.”
ANZ’s research found younger generations now have a better understanding that they need to save now to reap the benefits later in life.
According to Mackenzie, KiwiSaver has done “a lot of heavy lifting” in this area as the scheme is starting to mature, younger people have grown up with KiwiSaver and it has a high level of trust.
And it’s because of KiwiSaver’s strong branding and reputation that Mackenzie believes changes to the scheme should be rolled out slowly so people – and KiwiSaver – are given time to adjust.
“My personal view is that the retirement gap is a really gnarly problem for New Zealand as a society. It’s going to take all of us working together to solve and by all of us I mean employers, the Government and KiwiSaver providers,” she says.
“So to the extent we do make changes, they will land best if we provide people with certainty and plenty of time for all of us to adjust.”
The Retirement Commission has also called for a raft of changes to KiwiSaver in the last year. Retirement Commissioner Jane Wrightson wants a higher default contribution rate of at least 4% and says employers should be matching at this level or more.
ANZ is in support of KiwiSaver changes like raising the default contribution rate from 3% to 4% and motivating younger KiwiSaver members via matching contributions for under-18s.
Mackenzie says raising the contribution rate to 4% is a start.
“If you do the maths in terms of the retirement gap, clearly that is not enough but we need certainty in terms of what that glide path could look like and over what timeline,” she says.
Shortfall
ANZ also analysed the changes to KiwiSaver balances for members who took parental leave during 2023 and how that affected their contributions.
The data showed that, on average, becoming a mother means sacrificing over $2,500 in retirement savings because women’s contributions tend to not return to pre-birth levels for at least 1.5 years.
In comparison, contributions for male partners’ only dipped during the actual parental leave period.
Mackenzie says that a shortfall of $2,500 could create a retirement gap of around $9,000 by the time that mother reaches 65.
For women 10 to 20 years away from when they want or plan to retire, Mackenzie says they should think about what they want their life up to and after 65 to look like and how KiwiSaver fits into that.
They should then work out if they were contributing enough to their KiwiSaver and in the fund best suited for their needs.
“All investments have a level of risk. Your risk appetite might change over time, as your goals and investment timeframe change,” Mackenzie says.
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