Women shouldn’t be penalised for raising a family – closing the retirement savings gender gap

07 July 2020

Specialist KiwiSaver provider, AMP Wealth Management today announced employees on unpaid parental leave will continue to receive a 12 per cent employer contribution to their KiwiSaver to help close the retirement savings gender gap.
New Zealand women are 18 per cent worse off financially in retirement than men1, despite higher rates of participation in KiwiSaver2 and needing to stretch out their retirement savings for longer 1.

It’s a disparity fuelled by a range of factors, including that women are more likely to miss out on employer contributions to KiwiSaver by doing unpaid work, like looking after members of their household3.

AMP Wealth Management employees on paid parental leave already receive a 12 per cent employer superannuation contribution, but now those on unpaid parental leave will continue to receive the same 12 per cent contribution to their superannuation. This move aims to narrow the savings gender gap and improve retirement outcomes for more women, says AMP Wealth Management’s Chief Executive, Blair Vernon:

“One of the predicting factors for whether you are going to achieve a comfortable retirement is your capacity to continue to contribute to your KiwiSaver throughout your working life.

“Women are more likely to take a career break to care for family members, which means there’s a period in which many miss out on employer contributions to KiwiSaver.

“This initial disparity is multiplied through compounding returns, so by the time the average New Zealand woman reaches retirement age, they could be tens of thousands of dollars worse off.

“We don’t think New Zealanders should be penalised for raising a family and will increase support for employees on unpaid parental leave by contributing to their KiwiSaver for up to 38 weeks.”

The new benefit is estimated to be worth up to $10,000 per period of unpaid parental leave for each employee*. 

This additional provision is in keeping with AMP Wealth Management’s market-leading employee benefits package, which includes its recent announcement about moving to fully-flexible working, 14 weeks paid parental leave, free life, health and income protection insurance, as well as a 12 per cent employer superannuation contribution. AMP Wealth Management’s current return to work rate following parental leave is 78 per cent.

"We know that contributing the minimum of 3 per cent to KiwiSaver is unlikely to deliver the quality of life in retirement that most of us aspire to.

“Employers have a vital role in contributing to their employees' wellbeing and encouraging them to save for retirement, which is why we’re proud to offer our employees a 12 per cent KiwiSaver contribution”, says Vernon.

AMP Wealth Management’s commitment to pay its people a 12% employer superannuation contribution equates to an additional 69 per cent in overall superannuation savings at retirement, a study of its client base has shown**.

The gender pay gap is another factor fuelling retirement savings inequality. In 2019, AMP Wealth Management calculated its gender pay gap was 11 per cent (compared with an industry average of 24 per cent for financial services) and announced its intention to close the gap by increasing the proportion of women in senior leadership positions from 40 to 50 per cent by 2021.

Read the Help Report to discover more ways AMP Wealth Management supports its employees, clients and communities.

- ENDS

AMP Wealth Management is New Zealand’s leading non-bank retirement solutions provider with more than 221,000 KiwiSaver clients. The average member balance in the AMP KiwiSaver Scheme is $24,424, which is 19% higher than the industry average ($20,480). AMP Wealth Management was the first financial services provider to become a Living Wage Accredited Employer and is a proud community partner of Key To Life Charitable Trust and Dignity NZ. Read AMP’s Help Report for more info.

References

1)    https://www.interest.co.nz/opinion/101819/interim-retirement-commissioner-peter-cordtz-explains-why-many-women-arrive

2)    https://cffc-assets-prod.s3.ap-southeast-2.amazonaws.com/public/Uploads/Retirement-Income-Policy-Review/2019-RRIP/Research-docs/The-big-picture/Ak-Uni-PPI-Gender-Pension-Gap-Report.pdf

3)    http://archive.stats.govt.nz/browse_for_stats/people_and_communities/time_use/gender-and-unpaid-work.aspx

* This calculation assumes a salary of $70,000 per annum, the employee taking unpaid parental leave is 30 years of age, and is invested in AMP’s Lifesteps fund

** This calculation assumes there is no underlying differences in current balances or member contributions between groups receiving 3% or 12%, and that employees will continue to receive a 12% employer contribution from AMP Wealth Management until 65 years of age.

For further information please contact

027 225 4901