Listen up, women. Do you dream of travelling the world, indulging your grandchildren and living comfortably in old age?

The reality is women's retirement savings are lagging way behind men's and it's about time to do something about it. If not, expect to watch your male peers living the high life in retirement while you eat baked beans and wait for the bus.

At the age of retirement we have less income from savings than men and whatever savings there are need to be stretched over a longer time because we live longer.

This week I attended the Financial Services Council's Future of Super conference. The council has launched a plan that it is recommending to the Government to supersize our retirement incomes.


There were some great ideas tabled at the conference, such as less tax on retirement savings and the possibility of mandatory membership of KiwiSaver to ensure that everyone gets more than paltry New Zealand Super when they retire.

A session that interested me particularly, or should I say was particularly depressing, was about women's retirement incomes.

Ana Lockyer, head of retirement solutions at ANZ Wealth and a spokeswoman for the Women in Super group, says the ANZ's retirement barometer found 41 per cent of women are confident they will reach their retirement goal compared to 55 per cent of men.

The world of retirement savings has always been "littered with inequalities" for women, as AMP executive legal counsel Therese Singleton told the conference. It's better now than a generation ago when a man really was your financial plan post-children. However, women lag in financial literacy. What's more, females often take time out from work to have children in their highest earning years and often return part-time, limiting their savings compared to men from equivalent backgrounds and education. "Staying at home and looking after children isn't conducive to retirement savings," says Singleton.

Women do fewer hours in the paid workforce during their working lives than men, reducing their ability to save. The average male balance in KiwiSaver for the 25-40 age group is 22 per cent higher than for women, says Lockyer.

A research review by the Commission for Financial Literacy and Retirement Income NZ found that when women return to work from parental leave they tend to earn less than men whether or not they go back to the same employer.

On average, women in New Zealand earn 61 per cent of what a man earns, says Lockyer. That means even if the woman is contributing 3 per cent of her salary to KiwiSaver matched by an employer's 3 per cent contribution, she's still saving less than her male colleagues.

The gap in retirement savings between men and women is more complex than simply pay inequality.


For example, even when they invest, women are more likely to make risk-averse decisions, meaning their money doesn't grow as fast as their male colleagues', said Kate Armstrong, panellist and head of investments and insurance at Westpac.

They default into conservative KiwiSaver schemes and stay there and that can have a significant impact on savings over 45 years.

The commission has identified a long list of factors that will result in women having lower retirement savings than men. It starts from birth and is exacerbated by the type of subjects studied by women and resulting occupational segregation.

Young girls' ambitions are often different from those of boys. Lockyer said her 7-year-old dreams of being an air hostess, a profession that rates highly in young women's ambitions.

The commission's list includes workplace inequalities including pay structures and lack of flexibility that inhibit the promotion of women, the response by employers to breaks in work by women and the nature of the household unit. For example, the majority of solo parent households are headed by women.

Women have a lower level of home ownership and asset accumulation. For some groups of women a variety of cultural and ethnic factors may also exacerbate disadvantages.

There are many ways the Government could help. Dr Andrew Coleman of Otago University's department of economics cited at the conference an example from Sweden where women are entitled to Government contributions to their retirement savings while on maternity leave.

Women in Super would like to see the Government look at the issue of KiwiSaver contribution holidays, which affect both men and women. If someone on the minimum wage takes a five-year contributions holiday from KiwiSaver in their 20s that person will on average be $50,000 worse off at retirement, says Lockyer. That amounts to $2.2 billion for the women currently on contributions holidays.

The Government could also change the default KiwiSaver option to life stages funds, which would help counteract women's inbuilt conservative bias. These funds automatically adjust according to age. Younger investors' money is channelled into growth funds, but as they near retirement the money moves into more balanced and then conservative investments. "It would take some of that burden of decision-making off [women] to have hopefully the best outcome in the long term," says Lockyer. Many in the KiwiSaver industry would like to see life stages funds become default instead of conservative funds.

Another improvement by Government that Women in Super would like to see is embedding financial literacy into the New Zealand curriculum to ensure young people leave school with some financial knowledge.

Legislation isn't enough to get women's retirement savings on track. Retirement commissioner Diane Maxwell says both policy and behavioural changes are needed.

Maxwell would like to see women become more prepared to talk about money. Women need to familiarise themselves with the Property (Relationships) Act and be willing to have financial discussions with their partners, she says. "When they go to a job [interview] they need to be prepared to talk about money."

She cites the example of a female friend who admitted that her psychology patients weren't paying their bills. "A male counterpart would look someone in the eye with a steely gaze and say, 'you owe me money'," says Maxwell. "When women are in a hole, they plant flowers. When men are in a hole they dig themselves out.

"We need to be [educating] our girls around negotiating for pay, career choices and ambition."

Maxwell says if women are willing to pay $300 to have their hair done and $200 for shoes they should be willing to spend some money on getting good financial advice. Armstrong agrees that women need to change their mindsets and behaviours.

She cited a teenage female relative who admitted that she thought a future husband would take care of her retirement savings.

"It's our responsibility as parents of young girls to educate them."

Lockyer has three golden rules for raising daughters' financial literacy: teach them to aspire, give them opportunities and open a KiwiSaver account for them when they're young.

Parents shouldn't give up giving appropriate advice when their daughters reach 16 or 18 or go to university. The family is often a major source of financial information for children into their 30s and sometimes 40s.

One message for 20-something girls, for example, would be to make additional contributions into KiwiSaver in the years before they take a career break, says Lockyer. "She will get the benefit of growth and won't think, 'oh my goodness, I am so far behind'."

Over and above family and Government there are two other groups Lockyer believes can help in the process of raising women's retirement savings. That's employers and financial services providers.

Employers can help, she says, by providing flexible working for women, career opportunities and wage equality.

Progressive employers can go further than that. Lockyer cites the example of Australian company Rice Warner, which makes 9 per cent contributions to the Australian Super funds of its male employees and 10.5 per cent for females. "That is innovative and recognises the gap that exists [between men and women's retirement savings]."

Providers such as ANZ Wealth can also help, she says, by understanding their customer groups - such as women - and communicating to them in a targeted way. For example, ANZ focus groups found that women wanted personalised interactive material.