As the policy challenges of dealing simultaneously with an ageing population, increased costs of health care and welfare benefits, and economic and fiscal constraints, an increased expectation for self-funding in relation to retirement income is being encouraged in New Zealand. At the same time, there is recognition that universal provision has served us well in the past. Issues of affordability aside, the beneficial impacts of that system (in particular its simplicity and transparency) should not be lost in the recognised need to develop and maintain an alternative retirement savings scheme for the future. One of the key points of debate in exploring the tensions between these policy goals is the desire to ensure that a range of demographic groups in our population (women, Mäori, Pasifika, migrants, people with disabilities) are not disadvantaged in relation to the general population.
This paper is a short summary of key themes around women and retirement savings. It has been prepared for the Commission for Financial Literacy and Retirement Income (CFLRI) by Heathrose Research, and is designed for a public audience. It is based on a stocktake of research published in 2009 and available at http://www.cflri.org.nz/files/file/RIR-2010%20REVIEW-HEATHROSE.pdf. This updated summary draws on the main themes outlined in the 2009 paper and New Zealand and international reports and research completed since then.
As a foundation for the paper, we draw on three issues from the literature, that underpin the discussion presented.
The first is the definition of retirement income. In most western economies, this is made up of 3-4 different components. The first of these is a basic level of income security, often provided through public welfare provisions, and available to all. On top of this retirement income may be supplemented by pension schemes (such as those provided by an employer) and/or by savings or return on investments. Increasingly, retirement income is seen as including earnings from paid work performed after “retirement age” – reflecting a social change where retirement is a process of transition rather than a discrete event.
The second is that financial retirement planning can be seen as falling into two broad categories – financial preparedness, and retirement thoughts and planning behaviours. The distinction between the two is based on the differences between an accumulation of wealth and/or ownership of property, and the extent to which individuals have thought about retirement and discussed it with others.
Thirdly, analysis of retirement income and savings issues benefit from both a gender analysis, and a life course perspective. A gender analysis considers the impacts of policy setting on the different life experiences of women and men. A life course perspective suggests that individuals face choices at different times in their lives, based on their experiences from the past and expectations for the future. Life course perspectives also recognise the influence of the culture and ethnicity, and the social and economic environment in which individuals make economic decisions.
This paper uses these concepts to discuss issues related to retirement income for women in New Zealand. Its conclusions are that although the retirement savings and income situation for women in New Zealand is better than in many other countries, that women are still disadvantaged in comparison to men. In addition, it suggests – in line with research carried out in other countries4 - that despite the fact that inequality between women and men has decreased, this has largely occurred as a result of better-educated and higher-income women making gains.