Retirement Issues for Women

National Library of New Zealand
Wellington

Rau rangatira ma, tenei te mihi ki a koutou i runga i te kaupapa o te ra. Tena koutou, tena koutou, tena ra tatau katoa.

Welcome everybody, to this discussion forum with the Retirement Commissioner and Women in Super, hosted by the Ministry of Women’s Affairs. Thank you all for coming. Your contribution today will help the Retirement Commissioner with the 2007 Review of Retirement Income Policies, ensuring that a gender perspective comes through.

Women’s working lives are often very different from men’s. Women frequently don’t have continuous full-time employment because they are more likely to take time out of the paid workforce, reduce their hours or become self-employed. They do this in order to raise children and, in later years, many make similar choices to care for elderly relatives.

Add to this the pay gap, and the result is that on average women have much lower earnings over their working life, which has a big impact on their ability to save for retirement. If that isn’t enough, then consider that marriage and relationship breakdown often also has a greater financial impact on women, including on their retirement income; and the fact that women’s lower retirement savings have to be spread over a longer period than men’s retirement savings because they live longer.

These all reinforce the reality that there are significant gender differences when it comes to retirement and we need to take these into account when we develop policies.

Not that New Zealand is alone in this.

Earlier this month I noticed an article in the Herald, which quoted recent research on Australian women’s retirement income titled ‘Women fall through the gaps’ .

It said that many Australian women are falling through a social and financial gap that leaves them to retire with only a quarter of the average man's superannuation.

The factors identified against women when it came to saving for retirement included time out from the paid workforce, child rearing and lower lifetime incomes. On average, Australian women spend 20 years less in the paid workforce than men, earn about $18,000 a year less, and they live five years longer.

However, there are two very significant differences between New Zealand and Australia; one is their compulsory superannuation; the other is our universal superannuation scheme.

NZ Superannuation is something we must jealously guard as women. If you need an explanation consider this. 55 per cent of women, as opposed to 38% of men, who are currently in retirement, are totally dependent on NZ Superannuation. If NZ Superannuation were to be reduced to a means-tested benefit, a much greater proportion of women would be relegated to a ‘safety net’ level of income, something which would disregard all societal contributions that are unpaid.

I know some of you have heard me say this before, but I will never forget how much it meant to my grandmother when she received her own money paid into her own account – something she hadn’t experienced since she left the paid workforce to get married.

I know that experience is becoming increasingly rare, but what about those who devote their lives to charitable work for example?

And there are other women who experience disadvantage in the workforce, which becomes a multiplier of disadvantage in retirement, when there is only a safety net.

The recommendations concerning women in the last Retirement Income Report four years ago covered the need for greater education; the need for retirement schemes to accommodate people who have periods of broken employment; and the need to address the gender pay gap, starting with the state sector. All of these are being addressed and I want to congratulate in particular the Retirement Commission for the Sort Me page of the internationally recognised Sorted website and the Minister of Labour and her department for leading the pay and employment equity reviews in the public sector.

And I want to place on record my congratulations to the Minister of Finance, who has led the way in securing the future of NZ Superannuation through the so-called ‘Cullen Fund’ and who has now introduced the KiwiSaver scheme, which enables people to better match their pre and post retirement incomes, without undermining the universal application of NZ Superannuation. KiwiSaver has a number of features, including diverting contributions to mortgage repayments and the opportunity to have a contributions holiday. And of course there is the ability to withdraw savings for a first home purchase, which will be accompanied by a significant grant. It is an exciting concept and on 1 July it will be a reality and I cannot wait!

So on that note, can I thank the Retirement Commissioner and Women in Super for this timely opportunity to consider these highly topical issues. And thank you to all the participants for giving so generously of your time and effort. I look forward to the results of today’s discussion.