The gender gap in KiwiSaver is becoming a major concern, and recent research by the Retirement Commission has revealed some troubling findings. According to the study, men, on average, have a KiwiSaver balance that is $9,352 higher than women, which is a significant 25% difference. This raises questions about gender equality in investing and highlights the need to address misconceptions influenced by traditional gender roles.
Actuaries from Melville Jessup Weaver analysed the data and found that the gender gap in KiwiSaver balances is widening. In just one year, the average gap increased by 5%, with men having an average balance of $34,496 compared to women's $25,144 during the KiwiSaver slide of $3.6 billion. Surprisingly, this difference couldn't be explained by variations in fund choice, withdrawal patterns, or suspension behaviour between men and women.
The growing gap among younger KiwiSaver members is particularly alarming. The early years of investing are crucial for capital growth through compounding interest. If women start with lower KiwiSaver balances than men, they're likely to stay behind even with compounding. This can significantly impact women's financial well-being, especially as they approach retirement.
Narrowing the KiwiSaver Gender Gap through Empowerment and Education
The study also found differences in investment strategies between men and women. Men tend to have a higher percentage of their assets in growth funds, while women tend to lean towards conservative funds. This gap becomes more pronounced as individuals near or surpass the age of 65. Interestingly, among younger savers, the difference in fund allocation is relatively smaller. This implies that lower average balances may influence women to adopt a more cautious approach to investing, inadvertently limiting their potential for higher returns.
Addressing the gender gap in KiwiSaver requires a multi-faceted approach. We must challenge and overcome misconceptions about women's investment capabilities and promote financial education. Comprehensive financial education and gender equality initiatives in all aspects of society will play a vital role in narrowing this gap. By creating a supportive environment that values and encourages women's participation in investment and wealth creation, we can pave the way for a more equitable and prosperous future.
The widening gender gap in KiwiSaver balances highlights the urgent need for change. It's clear that both men and women are not reaching their full investment potential, impacting their financial futures. By dismantling these misconceptions, providing financial education, and empowering women to take control of their financial destinies, we can bridge the gender gap in KiwiSaver and create a brighter, fairer future.