KiwiSaver Balances Reflect Motherhood Penalty
In a society where gender equality remains a distant dream, the financial implications of motherhood on women’s KiwiSaver balances have come sharply into focus. Kate, a devoted mother who has taken a step back from full-time work to care for her children, shared her concerns about her KiwiSaver balance of $15,000 compared to her husband’s $120,000. This vast difference in savings has left her contemplating her financial security in the future as her parents age and her responsibilities shift.
Similarly, Jess from Wellington found herself in a similar predicament, with her KiwiSaver balance significantly lower than her husband’s after years of part-time work and caregiving duties. She expressed her worries about her earning potential and the financial vulnerability she may face in case of a split.
The Motherhood Penalty: A Harsh Reality
The issue of the motherhood penalty is not new, as data provided by actuaries MJW reveals a 25 percent gap between women’s and men’s average KiwiSaver balances. Women aged 56 to 60 had an average balance of $48,489, significantly lower than men’s $66,312. The disparity continued for those aged 61 to 65, with men having over $70,000 in their accounts compared to women’s $51,971.
Financial adviser Rachelle Bland emphasized that women’s contributions in caregiving roles should not be undervalued based on their KiwiSaver balances alone. She highlighted the importance of non-monetary contributions to the family unit and the reassurance that KiwiSaver is considered relationship property in case of a split, ensuring equal entitlement.
Empowering Women for Financial Security
To bridge the gap and empower women financially, experts suggest strategic steps to boost KiwiSaver balances. Liz Koh from Enrich Retirement advised maintaining minimum contributions to secure the member tax credit of $521 a year from the Government, even during periods of lower earnings. She emphasized the need for long-term retirement savings goals and adjusting contributions accordingly.
Furthermore, redirecting additional contributions to a partner’s KiwiSaver account, especially if they are on a lower tax rate, can maximize the family’s benefits. Some employers have also committed to contributions during parental leave, and the Government now offers a 3 percent contribution to KiwiSaver for those on paid parental leave who continue their contributions.
In conclusion, by recognizing the motherhood penalty and taking proactive steps to address it, women can secure their financial future and ensure equality in retirement savings. Let’s strive towards a more equitable society where caregiving contributions are valued and rewarded, both monetarily and emotionally.