Women struggle to retire as early or as securely as men

Longevity literacy is critical to help women live confidently and securely when it comes to their wind-down years. South Africa’s gender pension gap sits at 26%, reflecting the average difference in retirement income between men and women. Farzana Botha, segment manager at Sanlam Risk and Savings, said that often, women cannot afford to retire as early or as comfortably as men. She believes that turning this around should be a national imperative.

Botha said: “A multitude of factors contribute to the gender pension gap, including the facts that women typically live about five years longer than men, but earn 82% of what their male peers make, for equivalent work. Closing this pay gap will take close to 300 years. Women must be empowered to control what they can. This includes stretching their retirement incomes for longer and preparing for higher health-care costs. Longevity literacy is key to this.”

A recent Sanlam study shows that, like men, women hope to retire comfortably from age 65 on. “We need to reframe retirement to be more personal and less rigid and conventional. The wind-down years offer incredible opportunities to pursue new careers, travel and passion projects, spend time with loved ones, and impact one’s community in a lasting way. In fact, 33% of women view retirement as an opportunity to start a second, gentler career. That’s what we need to empower women to focus on. Then it’s about building real road maps to achieve the requisite financial freedom to reach these goals.

Contributing factors to the global gender pension gap:

Here, Botha shared nine factors behind the gap, as described in the 2022 Women’s Report and other sources:

• Men are more likely to be employed than women: in 2022, close to half of all working age women in South Africa were out of work, versus 26% of men.
• Women are more likely to work part-time (59% of part-time employees are women), thus earning less than full-time employees.
• Women are still responsible for more care activities (13.3%) in their non-working time, compared to men (6.6%). Care work is chronically undervalued and usually unpaid.
• South Africa’s pay parity score is dismal, ranking 111th out of 146 countries.
• Globally, women who take a year off for caregiving earn 39% less than those who do not. Fathers’ rate of workforce participation is 21.1% higher than that of mothers. Lack of affordable childcare is hugely restrictive for women the world over; it inevitably impacts what women can afford to contribute toward retirement.
• Women often have lower levels of financial literacy, impacting their decision-making.
• 51% of men have their employers contributing to their pension funds, versus 46% of women.
• Education does not always help. In fact, the pay gap between men and women increases with more education. Globally, women with a bachelor’s degree earn 74 cents for every dollar their male counterparts (in education) receive.
• 42% of houses in South Africa are female-headed, and about 60% of homes have absent fathers.

Given all these factors, globally women tend to contribute 30% less to their retirement accounts. Botha added that, according to the recent Sanlam survey, 48% of women say that they are probably not saving enough towards their retirement to make their goals a reality. In fact, 26% say they cannot afford to stop working and will have to work for as long as they can. “Closing the gender pension gap is a multifaceted, immensely complicated task that requires sustained, creative engagement from myriad stakeholders. It also requires targeted financial literacy interventions for women, from a young age.”

Helping women make positive choices early on

Botha said: “The gender pension gap has devastating consequences for everyone, it’s not just a burden for women. It impedes economic growth and inevitably impacts state resources. The World Economic Forum (WEF) phrases it succinctly: so long as the gender wage gap exists, there’ll be a gender pension gap. So long as women are doing the lion’s share of care work that’s chronically un- or under-paid, there’ll be a pension gap.

“Longevity literacy plays a crucial role. We need to enable women to make positive choices early on, to put the building blocks in place for a long, fulfilling life. Part of this means making regular retirement contributions, however small these may be. It’s also critical women have health-care protection in place. Financial advisers can play a pivotal role in helping women choose appropriate retirement plans, for example, and outlining the benefits of a life annuity. The earlier we can help women to invest in their financial future, the better for them, and for our nation.”

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