Closing The Gap: How Good Advice Can Help Women’s KiwiSaver Balances Grow

As KiwiSaver demographic reports continue to remind us, women tend to have lower KiwiSaver balances than men*. This is often attributed to the gender pay gap and time out of the paid workforce for childcare.

But another key influence is that women also have more assets invested in conservative KiwiSaver portfolios, while men have more assets invested in KiwiSaver growth portfolios**. This conservative investment strategy means women’s balances typically won’t grow as fast.

Women’s fund choice is not simply due to gender - data shows that people with lower KiwiSaver balances tend to invest more conservatively and avoid growth funds***.

“These factors create a double whammy that negatively affects women’s balances” says Kirstien Taylor, Generate KiwiSaver Adviser.

The good news is that, by getting expert KiwiSaver advice, women can make some advances towards closing this gap.

The importance of KiwiSaver advice can’t be underestimated - advised Kiwis have approximately 52% more in their KiwiSaver account than those who haven’t had advice, according to a 2020 study by the Financial Services Council****.

“One of the key things a KiwiSaver adviser can do is help women determine whether they’re in the right fund for their risk preference and goals. For those with a long-term investment horizon, a growth or aggressive fund is often the better choice” says Taylor.

Generate’s aim is to inform and empower Kiwis with advice to help them secure a better financial outcome at retirement. More than 84% of Generate members have received KiwiSaver advice from either its own advisers or a third-party adviser.

This advice model has a significant impact - more than 80% of Generate’s KiwiSaver members are in growth funds (Growth or Focused Growth), which provide the highest potential for long-term returns, compared to the national average, where only 46%***** are invested in a growth fund.

What’s more, the Generate member cohort strongly bucks the trend of females shying away from growth funds.

In fact, Generate’s Growth fund is more popular with women than it is with men - the split is approximately 55% female versus 45% male. For Generate’s Focused Growth fund (an ‘aggressive’ fund), the split is almost 50:50******

Based on these stats, Generate is rightly proud of its commitment to helping women make savvy decisions about their savings. As with all of its KiwiSaver members, Generate’s goal is to maximise potential investment returns for a brighter financial future at retirement.

Other factors that can help women’s KiwiSaver balances:

• Continuing to contribute to KiwiSaver during paid parental leave. This is optional, but if an employee chooses to have KiwiSaver deductions of at least 3% taken from their paid parental leave payments, Inland Revenue will then also make employer contributions of 3%.
• Continuing to contribute when working part-time or freelance (self-employed) over child-rearing years. Putting in at least $1,042.86 each year will ensure the Government contribution of $521.43, so long as you meet residency criteria.

Disclaimer:

1. No part of this article is intended as financial advice; it is intended as general information only. To see our Financial Advice Disclosure Statement, please see Generate FAP Disclosure Statement. For more information about the Generate Scheme's see the Generate KiwiSaver Scheme Product Disclosure Statement or the fund updates. The issuer is Generate Investment Management Limited. Past performance is not indicative of future performance.

Notes

*Men have 25% more, on average, in their KiwiSaver savings than women - https://www.women.govt.nz/women-and-work/retirement

**NZ Retirement Commission: New data reveals gender gaps widening in KiwiSaver balances across all ages - https://retirement.govt.nz/news/latest-news/new-data-reveals-gender-gaps-widening-in-kiwisaver-balances-across-all-ages

***A study by the New Zealand Society of Actuaries’ Retirement Income Interest Group4 found that investment choice was driven by investment balance size, rather than gender.

****FSC: Money & You - Breaking Through the Advice Barrier, December 2020

*****FMA National KiwiSaver Report 2024. National average both genders - as of September 2024, around half of all KiwiSaver funds were invested in growth funds.

******Generate KiwiSaver member report as at 31 December 2024. This data excludes members who did not specify a gender (less than 1% of members). Some members may also be invested in more than one fund.

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