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National
Jo Cribb

Matched KiwiSaver pledge an important step forward for gender pay gap

Taking one year out of the workplace to raise a child can result in $15,100 less in a KiwiSaver account at 65. Photo: Getty Images

It will take more than a policy increasing the retirement savings of women on parental leave to properly tackle gender gaps, but it's a start

Opinion: In the fine print of the Budget there was a line item, a mere $19.6 million that seems to have gone somewhat unnoticed. 

The Government will pay a matching KiwiSaver ‘employer’ contribution to anyone on paid parental leave. 

Putting aside any sinister connotations that while on parental leave, you are working for the state, this an important step forward in acknowledging the impact of the gender pay gap and the need to sort it out.

READ MORE:
‘I was duped’: The discovery I was paid tens of thousands less than a man * The Aussies have thrashed us on pay transparency The 50th birthday of the Equal Pay Act is no cause for celebration * It’s time we all stepped up against unjust pay gaps

Though the number of men taking paid parental leave has tripled over the past few years, men account for less than 3 percent of paid parental leave recipients. 

Point 1: Women are mostly likely to be the ones on parental leave. 

Research last year showed that the average KiwiSaver balance for women is 20 percent lower than the average balance for men across all age groups. It found that taking one year out of the workplace to raise a child can result in $15,100 less in a KiwiSaver account at 65.

Point 2: There is a substantial retirement savings gender gap and that small line item in the Budget is on the right track to reduce the gap.

But as the Retirement Commissioner pointed out, only households with higher incomes will likely be able to afford to keep paying their own KiwiSaver contributions while on parental leave. The allocation of $19.6m, she concludes, shows that less than a third of those on parental leave are expected to be eligible for the government matching contribution.

Pay transparency here will likely result in a 20 percent decrease in pay gaps for women, Māori, and Pasifika workers. Thinking about what that would mean for KiwiSaver contributions over a lifetime of working is mind-blowing

The number of Pasifika families who got the KiwiSaver matching funds will be an interesting Official Information Act request in coming years. 

If everyone is contributing three percent of their income to KiwiSaver, and men are paid on average about 10 percent more, it is going to take more than a policy focused on one year to address the retirement saving gender pay gaps. Each pay cheque puts women further behind. 

Pasifika women – as Equal Employment Opportunities Commissioner Karanina Sumeo’s Pacific Pay Gap Inquiry has shown – earn 25 percent less, making them nowhere near even the starting line for retirement savings. 

Point 3: The benefits of the KiwiSaver top-up pale in comparison with the impact of gender and ethnic pay gaps on our ability to save for retirement.

As Karanina Sumeo and many others have advocated, pay transparency is internationally recognised as a key mechanism to reducing pay gaps. So much so, in March the European Union passed a pay transparency directive including the requirement for all organisations in Europe to share pay information and undertake gender-neutral recruitment, and can fine for non-compliance.

Pay transparency here will likely result in a 20 percent decrease in pay gaps for women, Māori, and Pasifika workers. 

Thinking about what that would mean for KiwiSaver contributions over a lifetime of working is mind-blowing. As is the question – why hasn’t this been done yet?

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