How does your KiwiSaver balance compare?

Comparisons between New Zealand and Australia usually don't end well. It's the same with those involving the United States and Canada. Feelings get hurt. Conversation descends quickly.

Here's hoping the end justify the means; in this case super comparisons with our Antipodean neighbour sparks positive change.

I was originally going to write about the growing drift between the balances of men and women in KiwiSaver, based on recent reports the increase jumped from 20% to 25% in one year. When I looked a little closer at the actual balance differences by age, I became triggered.  Then doubly so after seeing how the numbers stack up across the Tasman.

For Kiwi men aged 18-25, the average is $8,694 compared to $7,099 for women. That was in 2022. 
The difference is bigger yet again between 31-35; $21,535 for men and $16,985 for women and by their early 40s, $36,114  vs $27,269.

The Retirement Commission, who contracted the KiwiSaver data mining, said it had ruled out hardship withdrawals, savings suspensions and first home withdrawals from the equation. The inference was that contribution rates differences (which it doesn't have clear transparency over) are behind the yawning gap. The other obvious explanations are more women than men work in part-time jobs, pay inequity across many sectors, and women taking time out of the workforce to raise families. All that combined serves to pull down our balances, compared to men.

Bridging the gap 

The superannuation gender gap is increasingly getting the attention of policy makers both here and across the Tasman. During its most recent Budget announcement, the NZ Government announced an employer KiwiSaver contribution top-up to Paid Parental Leave. It'll help at the margins but it certainly won't fix the problem.

Whether you're male or female, the savings are still well below what retirement experts predict you'll need to retire comfortably. By 65, even a no-frills retirement, assuming you want to live in either Wellington, Chch or Auckland, will require around $300k in your KiwiSaver. The average balance in 2022, for those over 65 in KiwiSaver, was only $51k.

Ozzie, Ozzie 

When you compare balances with our Aussie counterparts, there's a continental divide.

According to research by Deloitte, for Australia Super, the average balances of Aussie men, age 45-49 is north of $224k (AUD).

Women, comparatively, are left in the dust at around $146k. 

Similar factors explain the gender super gap in Australia, according to government policy papers on the subject. 

The shock and horror isn't so much around the gender balance differences, although I admit, it does not thrill me.

What is more stupefying is just how much bigger average balances are in Australia.

Before taking into account currency differences, Australian women in their mid 40s, have almost 4.5 x as much in their Superannuation accounts as Kiwi women. 

I doubt our Australian sisters are happy they're lagging so far behind their male counterparts, but if they saw our puny balances here they'd been feeling very rich indeed. KiwiSaver balances for women aged 41-45 are $27,269.

Let's clarify a few things.

Australians have been at this savings game a lot longer than New Zealanders.

The Superannuation Guarantee (Administration) Act came into force around 1992, forcing employers by law to contribute into their employees schemes. KiwiSaver was only introduced in 2007.

To be fair (to us), Australians have had a huge head start  in terms of education, savings and retirement planning psychology. It's also compulsory. 

In New Zealand, employees are auto-enrolled into KiwiSaver when they start their first job. If they don't want to commit, they can opt-out within three months.

In Australia, employers make contributions to their employees’ accounts as a proportion of wages or salaries. The contribution rate increased from 10.5% to 11% (of wages/salaries) on 1 July 2023, and is scheduled to rise by a further 0.5% each year until it reaches 12% (on 1 July 2025)

You can see the full rates chart here at the Australia Taxation Office. 

Compare that to New Zealand where there is a minimum 3% paid by employees and a minimum 3% by the employer. The Retirement Commission found that 2/3 of KiwiSavers still only pay the minimum of 3%. Also of note, is that 41% of the 2.9 million KiwiSavers have balances worth $10,000 or less!

It's no secret that many jobs in Australia pay more than they do in New Zealand so that also accounts for higher balances over time. Unlike New Zealand, you can't use your savings in Australia as a deposit on a first home. Not yet anyway.
It's all quite depressing I admit but I've never known Kiwis to let Australian comparisons get the better of them, for anything.

Take action 

1. Start by checking what your actual balance is. If you don't even know who your provider is, contact the IRD and they'll let you know.
2. Check your projected balance at age 65. You'll find this on your last annual member statement. It will be based on certain assumptions like your current contribution rate, your fund type, inflation etc.  Read the assumptions!

Ask yourself if you have the ability to contribute a higher amount. Use Sorted.org.nz's KiwiSaver calculator to see what a difference a 4, 6, 8, or 10% contribution rate could make over time. 

If you're a woman, make sure you're being paid equitably for your work and take salary negotiations more seriously.

On a somewhat happier note, women who end up living into their 80s, will finally overtake men in the KiwiSaver department. The same data set quoted above found that females age 86+, had average balances of close to $227k, compared to men with half that. 

I'm guessing this has to do with the fact that they outlive men on average, and are usually the beneficiaries of a deceased spouse's wealth, including their KiwiSaver. 
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Still, I'm not counting on the long game. You?

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