South African women are retiring with less income than men – study

South African women are retiring with less income than men, with the average difference in retirement income between men and women being about 26%, according to Alexander Forbes 2021 Member Insights.

The insights revealed that in 2020, men had a higher retirement ratio than women.

SA men retired with an average replacement ratio of 35%, but women retirees’ pensions were between 9% and 26% less on average.

Head of research, best practice and academy at Alexander Forbes, Vickie Lange, said the starting pension for men was 35% of their final salary, while it was only 26% for women.

“This gender gap concerning pensions is a result of decades of inequality, breaks in careers, wage differences, as well as the higher cost of converting accumulated savings to an income for females,” said Lange.

Gender-pension gap

The gender-pension gap is an extension of the gender-income gap due to the close relationship between employment patterns and resulting pensions.

“Women generally have shorter careers due to caring responsibilities such as childcare or caring for ageing parents. This ultimately reduces their lifetime income while working, and therefore into retirement,” said Lange.

The gap was vast among the Organisation for Economic Co-operation and Development (OECD) countries, with Japan’s gap at almost 50% and Estonia’s gap less than 5%.

The report concluded that while there is no single cause of a gender pension gap, it results from a broad range of influences.

The Alexander Forbes 2021 Member Insights is a quantitative analysis of close to one million members from January 2020 to December 2020, focusing on the member saving for retirement.

This is the most extensive membership sample of all retirement fund surveys in South Africa.

Alexander Forbes has included data relating to education, marital status and credit status for the first time in the industry. 

The average age of members analysed is 40 years old with an almost even gender split (49% are women and 51% are men) with an average income of R19,327.

Women have higher education levels than men

The ratio of females to males has improved from the 39% of women making up total membership in 2012, compared to the 48% last year.

However, a telling statistic from the Alexander Forbes 2021 Member Insights is that there are twice as many men in the R960,000 salary range relative to women.

Women have higher education levels as well. At least 38% of women have matriculated, while only 35% of men completed high school.

Some 9% of women hold post-graduate qualifications, in contrast with the 7% of men.

And, 28% of women attended university as opposed to 23% of males with tertiary education.

The latest World Economic Forum Global Gender Gap Report shows that South Africa has improved its ranking by two positions to become the 17th most equal paying country out of 149 countries.

Women have lower levels of credit risk

“On average, almost 55% of female members have the ideal debt to income ratio. They are spending between 20% and 40% of their monthly income on repaying debt,” said Lange.

Regarding financial risk, women have a lower risk than males, with 771 females obtaining an XDS Presage credit rating score compared with 762 males.

The debt-to-income ratio of women is at 74% compared with 80% for men, while 48% of females had overdue loans compared with 51% of males.

At least 41% of females had taken unsecured credit compared with 49% of males, while 51% of females had secured credit versus 54% of males.

Compiled by Narissa Subramoney

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