Kate discovered a substantial gap between her and her husband’s KiwiSaver balances, a disparity she attributes to her years outside full-time work while raising her children. Her balance stands at $15,000, while her husband’s has reached $120,000. This difference has become more concerning for Kate as she considers her financial future, especially seeing her parents exhaust their savings. Despite having managed her household and raising children, her student loan remains unsettled, unlike her husband’s.
Wellington’s Jess has faced a similar scenario, taking extended time off for childcare and now working part-time, leading to a KiwiSaver balance only a third of her partner’s. She acknowledges that the caregiving roles contributed to her reduced earning potential, intensifying the financial disparities. Jess expressed unease about her precarious financial state, should they separate, and called this “the motherhood penalty.”
Suggestions have been made for strategies to mitigate these financial imbalances. One proposal is allowing for some KiwiSaver contributions from partners to be directed into the accounts of women who have taken breaks for caregiving. In New Zealand, KiwiSaver accounts are considered relationship property, offering some security in case of separation. Nonetheless, career repercussions often leave women in weaker financial positions.
Actuarial data reveals a significant gap between the average KiwiSaver balances of men and women, further stressing the financial penalty for taking on motherhood roles. Financial advisors emphasize the importance of recognizing non-monetary contributions made by caregivers and advise that individuals keep up minimum contributions to benefit from governmental credits.
Options to alleviate this penalty include utilizing lower tax rates for caregivers who have not been in full-time work, making supplementary voluntary contributions, and ensuring employers continue contributions during parental leave. The Government now contributes 3% towards KiwiSaver for those on paid parental leave who maintain their contributions, providing a pivotal support mechanism.
These systemic challenges around the motherhood penalty call for increased awareness and innovative solutions to ensure equitable financial futures for women.
