The New Social Contract: Achieving retirement equality for women Aegon Retirement Readiness Survey 2019 The New Social Contract: Achieving retirement equality for women | 1 Note: Percentages are shown to zero decimal places. Rounding percentages to the nearest whole number may result in slight differences; for example, the percentages in some charts summing to slightly under or slightly over 100 percent. 2 | The New Social Contract: Achieving retirement equality for women Contents Foreword 4 Introduction 5 Part 1 – Mind the gap 6 Part 2 – Portrait of women 8 Part 3 – Retirement reality for women 10 Part 4 – Taking the right steps for retirement 12 Part 5 – Putting women at the center 16 Recommendations 18 Countries covered in the research 20 About the authors 37 Appendix 38 Appendix 1 – ARRI methodology 38 Appendix 2 – Answers to the "Big Three" financial literacy questions 39 Appendix 3 – Country comparisons 40 Notes 50 Disclaimer 51 Contact information 51 The New Social Contract: Achieving retirement equality for women | 3 The New Social Contract: Achieving retirement equality for women | 3 Foreword We are pleased to share with you the insights and These factors make it extremely difficult for women to recommendations contained in this report, The New Social achieve an adequate level of retirement income. Moreover, Contract: Achieving retirement equality for women, based women tend to live longer than men, which implies the need on findings from the eighth annual Aegon Retirement to prepare for longer retirements and save even more. Readiness Survey, a global survey of 16,000 respondents in 15 countries spanning Europe, the Americas, Asia, and Amid widespread concerns about the financial sustainability Australia. of social security and retirement systems around the world, a new social contract for retirement is needed. This new Women today are better educated and enjoy more career social contract must address the changes taking place in the opportunities than any other time in history. However, world today and embrace the social and economic realities even now, many struggle to achieve a financially secure of tomorrow. It must honor the principles of solidarity and retirement. sustainability and be adaptable for our ever-changing times – and it must achieve gender equality. Around the world, the persistent gender pay gap fuels long-term financial inequalities and higher rates of poverty It is imperative that women take greater control over their in retirement for women. Traditional societal norms and financial situation and retirement planning. Women need to gender roles also place women at a disadvantage in terms further engage in saving, investing, and preparing for long of saving and planning for retirement. Juggling employment and healthy lives and secure retirements. and unpaid parenting and caregiving responsibilities, women often take time out of the workforce or work part- The New Social Contract: Achieving retirement equality for time. The consequences of doing so extend beyond lost women builds on The New Social Contract: Empowering income. It negatively affects a woman’s lifetime earnings, individuals in a transitioning world (2019) and Women: her savings, long-term compounding of investments, and Balancing family, career & financial security (2014), and it even her employer-sponsored and government retirement provides a detailed set of recommendations. benefits. We invite you to join our call to action and improve retirement security among women. Catherine Collinson Leandro Palmeira Executive Director, Aegon Center Research Director, Instituto de for Longevity and Retirement; Longevidade Mongeral Aegon CEO and President, Transamerica Institute and Transamerica Center for Retirement Studies Mike Mansfield Program Director, Aegon Center for Longevity and Retirement 4 | The New Social Contract: Achieving retirement equality for women 4 | The New Social Contract: Achieving retirement equality for women Introduction The new social contract Women are faced with a number of significant challenges. It is the norm for many women to take the primary role in Achieving a financially secure retirement is an aspiration caregiving responsibilities for children, which often results for all. However, improvements in life expectancy, declining in more career breaks and increased likelihood to work fertility rates, and the increasing cost of healthcare are part-time over an extended period. Such realities make it putting the public finances of even the world’s strongest extremely difficult for women to accumulate sufficient economies under increasing strain. savings during their career to achieve a financially secure retirement. In response to this new reality, the blueprints for retirement systems around the world are being redrawn and a new The New Social Contract: Achieving retirement equality for equilibrium is forming among individuals, employers, and women highlights the gravity of these challenges. With the governments to fund the future of retirement. For many, dawn of a new decade, the report looks at steps women this has resulted in the need to work for longer than can take to improve their retirement preparedness. This expected or continue working part-time in retirement. There report also sets forward recommendations for employers is also an increasing emphasis placed on individuals to save and governments globally to take an active approach in for their own retirement, rather than count on government reducing the retirement preparedness gender gap, paving or employer funds as previous generations did. the way to a more equal future retirement landscape. While some challenges impact almost everyone preparing for retirement, certain groups face additional pressures The eighth annual survey (2019) that compound these challenges. The Aegon Retirement Readiness Survey (2019) includes responses from 16,000 workers and retirees in 15 countries: The challenge facing women Australia, Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Turkey, the UK, The first two decades of the 21st century saw great strides the US. Half of all respondents are women (8,067). Among in the opportunities and education provided to women in them, 64 percent are married or cohabiting and 58 percent early life. By 2015, girls starting school around the world have an undergraduate degree or higher. were expected to complete, on average, just over 12 years of education, outpacing the average for boys for the first The survey was conducted online between January 22 and time. Furthermore, adult literacy rates among women February 14, 2019. increased from 72 percent in 1995 to 83 percent by 20161. The research is a collaboration between the Aegon Center Despite significant progress in education, there is still not for Longevity and Retirement (the Netherlands) and equality in employment opportunity and pay in many parts nonprofits Transamerica Center for Retirement Studies® of the world. The effects of this are being felt over the long- (United States) and Instituto de Longevidade Mongeral term meaning that, come retirement age, there is still a Aegon (Brazil). marked gender disparity in retirement preparedness. I UNESCO Institute for Statistics Database The New Social Contract: Achieving retirement equality for women | 5 The New Social Contract: Achieving retirement equality for women | 5 1. Mind the gap The law of inertia: Five years on and the The subsequent five years have seen the rise and growth of awareness and action concerning the global disparities gap persists. In 2014, Aegon published The between women and men. At an individual level, women have joined together to fight against sexual harassment and sexual Changing Face of Retirement: Women - assault, with messages spreading rapidly across social media channels. Politically, advances have been significant, with the balancing family, career & financial security. election of a record number of women to the U.S. Congress in November 2018 and New Zealand’s Prime Minister Jacinda The report outlined the disadvantages Ardern becoming the first world leader to give birth and take maternity leave while holding office, also in 2018. encountered by women in terms of saving At a corporate level, the gender pay gap has taken up and planning for retirement, a result of the increasing headline space. As a result, some of the world’s largest companies, such as Starbucks, Apple, Salesforce, gender pay gap and time taken out of the Intel, and Adobe have full gender pay parity. Additionally, there has been progress in the opportunities for women workforce for parenting and caregiving. in senior leadership positions and as of 2019, 87 percent of global businesses had at least one woman in a senior management role2. Despite these global strides, many of the issues explored in the 2014 report remain true today - the most basic of these being that women are less prepared for retirement than men. Globally women earn on average 63 cents for every dollar earned by men3. Since 2006, the Global Gender Gap Report, published by the World Economic Forum (WEF), has tracked progress in closing gender gaps. WEF estimates that, based on today’s status and the trend observed over the past twelve years, it will now take 202 years to close the gap entirely. The result of this lifetime inequality between men and women means women are less prepared financially for their later years. As a society, we must ask ourselves if this is truly acceptable. Aegon Retirement Readiness Index – 2019