By ML Boyle.
Edited by Jessica Sutton.
Finally, after 50 years of being in the workforce, I recently became a Superannuant. Essentially that means I am no longer expected to be in full time paid employment. As you grapple with the daily grind you might be thinking that I’m lucky to not have to go to work anymore, and I can spend my days in those time-honoured pursuits associated with senior citizens, such as making jam, knitting and taking up lawn bowls. Unfortunately, this is not the case for me, nor for most women at this stage of life, and that is largely because we need to keep working at least part time just to make ends meet.
Retirement may seem like it should be the last thing on a young woman’s mind, but it is worth taking some time at the start of your working life to consider what retirement may be like. A good place to start is looking at the lives of the senior women in your family. How do they manage financially? What financial decisions did they make, and what would they do differently?
Hopefully, most elderly ladies will be content to look back on 50 years of adult life which has had more highs than lows; the exciting younger years of independence with an income that was all our own, followed by leaner years of perhaps a mortgage and children to upkeep. Then retirement looms, when we are not only unable to afford the same modest lifestyle, but also lack the opportunities to earn enough to make it better.
For most women in this situation, it is not that they have wantonly wasted money, but rather that they have not had the opportunity to become financially literate, and that their earnings have come from traditionally low paying jobs.
Anyone who started work before 2019 is likely to be financially illiterate. We are all the product of an education system that taught very little about how to navigate the adult world of finance. All those questions on matters of earnings, budgeting, saving, life insurance, debt, investing and retirement, that should have been addressed before leaving school, largely went unasked and unanswered.
It is therefore a very recent and very welcome innovation that financial literacy is finally being taught in schools. In 2017 the Commission for Financial Capability gained approval from government to implement a financial capability programme for secondary school students. By 2021, “Sorted in Schools” will have rolled out eight teaching and learning packages across years 9-13. For women who have missed out on a financial education, it is not too late to upskill yourself. There is a wealth of information available from banks, brokers, financial advisors and organisations.
New Zealand is currently one of only four countries that have flat-rate universal superannuation, the others being Canada, Denmark and Russia. Currently, if you are single and living alone you will receive $490.73 per week before Tax. That is $25,517.96 per annum before Tax. If you are currently working and earning the median gross weekly earnings for women of $906.00 per week, then you will need to adjust your lifestyle considerably when you retire, in order to manage on roughly half of your current salary.
While the universal nature of the pension at least means that men and women will receive the same amount of money, there are other issues which disadvantage women once they reach retirement age. These issues start at birth for cisgender women. Being born female means your life expectancy is longer than if you are born male, therefore you can look forward to more years of not having enough to live on.
Despite the Equal Pay Act being in force since 1972, women continue to be disadvantaged financially in the workforce and we have a persistent gender pay gap of 9.3% in New Zealand. Although women are beginning to enter male-dominated industries, the depressing result is that as women enter an industry, the pay level drops. Jobs which are undertaken predominately by women (such as Primary School teachers, nurses, retail, or hospitality) are still lower paid than male dominated industries (such as law, construction, engineering, or trades).
The reasons for the continued Gender Pay Gap are varied, and in the past were about gender-based differences in education, certain high paying careers being denied to women, and women taking time out of the workforce to have a family. More recently, the Ministry for Women has identified that “the majority (80 percent) of the gender pay gap is now driven by what the research calls ‘unexplained’ factors. These are the harder to measure factors, like conscious and unconscious bias impacting negatively on women’s recruitment and pay advancement”.
Women are being short-changed in the workforce because employers may still have the belief that she is in the workforce until she leaves to have a family, and therefore is not worth promoting to a higher paid or more senior role. There has of course been progress on some fronts including, equality of education, women being employed in traditional male industries, and the right to parental leave.
However, the traditional reasons for women having less earning power persist. If they are the primary carer of children or elderly relatives this limits the number of hours they can work. Ask anyone who is a stay-at-home carer with very young children, disabled adult children or elderly relatives and they will tell you that the work they do is only considered of value by government if it is undertaken by a stranger.
The issue of female-dominated work being undervalued is particularly pressing. It has taken nearly 40 years, but the Equal Pay Amendment Bill is currently in its second reading. The purpose of this bill is to “eliminate and prevent discrimination on the basis of sex in the remuneration and employment terms and conditions for work done within female-dominated jobs”.
So, as a young woman in your first few years in the workforce, what can be done?
Well, if you are employed in the private sector, you may be wise to look at the hierarchy of the organisation – how many women are in the senior roles? If the answer is not many, then this company may have gender bias at its core. If you do the same job as a male colleague, you may be getting less pay. Far away though it seems, this will impact your retirement. If you are earning the median pay for women of $47,112 per annum and join KiwiSaver, then your employer will be required to pay 3% into your Kiwi Saver which will give you $1,413.36 per annum. Allowing for the gender pay gap of 9.3% your male college could be earning $51,493.42 per annum and his Kiwi Saver account is benefitted by $1,544.80 per annum. So over 5 years he will have $7,724.00 and you will have $7,066 toward your retirement. You are being disadvantaged for no discernible reason other than gender. Don’t be afraid to flat out ask male colleagues what they are being paid. The only ones who benefit from “salary secrecy”, are bosses that want to underpay women with impunity. Be bold and talk to the boss about being paid what you are worth.
As for KiwiSaver, it shouldn’t be a saving scheme that you opt into and then forget about, assuming the minimum percentage will add up to a tidy sum when you reach retirement. You ought to learn how it works and how best to make it work to your advantage. Talk to your bank and have them explain the options and the risks of where your money is invested and make some savings goals for your retirement. Having this knowledge could make thousands of dollars of difference.
Women have historically been excluded from having a say over our own money, if we have been allowed to earn at all. In light of continued workplace discrimination, having financial knowledge as a young woman is becoming an absolute necessity. Do not unquestioningly accept that your workplace will do what is right for you. Know enough to know your own worth, because it will matter enormously down the line.