GENDER RETIREMENT SAVINGS GAP OF LOW-INCOME PROFESSIONALS Key ndings The “Traditional Working Mum” has the largest gender retirement savings gap of 44% The gender retirement savings gap is wider in Malaysia, Indonesia and Thailand than in Hong Kong and Singapore The average retirement savings gap between low-income working men 32% and women in studied Asian markets Main reasons for the gender Looking beyond retirement savings gap the present Women have Women working as shorter working para-professionals are paid periods due to lower than men. In some family-related countries, the difference is career breaks and early Risk of retirements >25% automation Technology advancements such as automation are posing risks of Women are more risk-averse and have lower financial displacement for low-skilled literacy than men in general women workers Main actions from different stakeholders EMPLOYERS GOVERNMENT INDIVIDUALS Accelerate gender diversity Enhance support for informal caregivers Bridge the financial literacy gap efforts by building a structured and encourage shared caregiving through education and practice diversity and inclusion strategy among couples by recognising women’s and take charge of financial that is aligned to the business unpaid contribution to their families in matters upon commencing imperative the pension system employment Copyright © 2018 Oliver Wyman 1 PREFACE While the issue of gender wage inequality is To measure the size of the gender retirement gradually being recognised by business and society savings gap, we created different archetypes based in general, the significant impact of the gender on typical profiles of low-income working women in retirement savings gap, a long-term consequence the region. We then modelled the life time savings of the pay difference and unequal sharing of care of these female archetypes, and compared that responsibilities and paid work within couples, is still with life time savings of a typical male archetype relatively underestimated. Given that women live to quantify the gender retirement savings gap longer than men on average, there is an increasing across different markets and across women with risk that retired women may end up in poverty or different archetypes. financial insecurity at an older age. With Asia-Pacific (APAC) being the fastest-aging region in the world, To better understand the drivers of the gender now is the best time to understand this pressing retirement savings gap as well as the current issue and make efforts to narrow the gap. status of low-income women’s financial conditions, we conducted two surveys to collect data and The Tsao Foundation's International Longevity inputs from low-income women, and from HR Centre (ILC) Singapore, a member of the ILC professionals from various companies. Global Alliance, along with Mercer and Marsh & McLennan Companies’ (MMC) Asia Pacific Risk The Mercer HR survey on retirement savings Center (APRC) are jointly publishing this report to for low-income women was conducted from analyse the challenges presented by the retirement December 2017 to January 2018. The survey savings gap between men and women in selected spanned six industries and reflects responses from markets in Asia. This study focuses specifically on 35 HR professionals of 27 different multinational low-income working women, the group of people companies that have operations in some or all of in this study most at risk, and seeks to answer the the five identified markets, including Singapore, following questions: Hong Kong, Thailand, Indonesia and Malaysia. 1. What is the size of the gender retirement The Tsao Foundation and MMC’s Asia Pacific Risk savings gap in different markets and for Center’s Survey on the Retirement Savings Gap of women of different working lives? Working Women in Asia was conducted in January 2. What are the key drivers for the gender and February 2018. Through Tsao Foundation’s retirement savings gap for low-income working women? networks, we surveyed 111 women from five markets and across different age groups and 3. What can different stakeholders do to narrow the gender retirement savings gap? educational levels. We hope this report will raise awareness about the importance of building and strengthening safety nets for women, and contributes to narrowing the gender retirement savings gap in the near future. Copyright © 2018 Oliver Wyman 2 CONTENTS 4 INTRODUCTION 5 INCREASING LONGEVITY AND RETIREMENT INCOME INADEQUACY 7 MODELLING METHODOLOGY 10 GENDER RETIREMENT SAVINGS GAP Gender wage gap Difference in working lives 14 DRIVERS OF THE GENDER RETIREMENT SAVINGS GAP 18 STRATEGIES TO CLOSE THE RETIREMENT SAVINGS GAP FOR WOMEN Employers: Create a holistic business strategy to advance women in the workplace Governments: Enhance support for informal caregivers Individuals and Society: Bridge the financial literacy gap 25 LOOKING BEYOND THE PRESENT: RISK OF AUTOMATION 26 CONCLUSION 27 APPENDIX 30 ABOUT THE SURVEY Copyright © 2018 Oliver Wyman 3 INTRODUCTION APAC societies are aging at an unprecedented to a huge financial burden which can potentially pace, driven by rising life expectancy and declining compromise her own financial security during birth rates. Compared to France and Sweden, who retirement.4 took around a hundred years for the proportion of elderly to double, Asian countries such as Japan, Given the context, this report chose to use China, Thailand and Singapore will (or already have) Hong Kong, Indonesia, Malaysia, Singapore experience(d) the same demographic changes and Thailand – five Asian markets characterised within a quarter of that timeframe.1 As the fastest by different prevalent demographic and socio- aging region globally, APAC is expected to record economic conditions – to examine if low-income an increase of 200 million elderly people between working women in the targeted markets have lower now and 2030.2 Aging of society presents numerous retirement savings than their male counterparts; challenges, one of which is the sustainability and hence being at higher risk of financial insecurity adequacy of savings in retirement.3 after retirement. Rising life expectancies are placing increasing This will be done by modelling the retirement pressure on pension systems and on the savings of low-income workers who are typically retirement savings of individuals. Given that described as para-professionals and who are women tend to have longer life expectancies and carrying out roles such as those of secretaries, lower participation in the workforce than men, receptionists, and clerks.5 This exercise will provide women’s financial well-being is at greater risk after useful insights, including the following: retirement, particularly for those in low-income • Quantify the gender retirement savings gap in jobs. While numerous factors are placing the selected markets financial well-being of low-income elderly women • Identify specific markets or female archetypes at risk, two key issues are particularly responsible: that have the largest gender retirement earnings and working period. savings gap • Evaluate the two key drivers of the gender Firstly, it is observed that a persistent wage gap retirement savings gap exists as female workers earn less than their male counterparts over their lifetimes. Secondly, Additionally, the report looks beyond the present women generally have a shorter working period; situation and into the future – anticipating how they take time off to care for their children, and technology advancements on the horizon such as sometimes retire early to take care of their older automation might pose a significant risk to women relatives or even due to lower retirement age for in lower-income jobs and further deteriorate women in some countries. In addition, single mums the already financially precarious position that worldwide, who head approximately 88 percent of these women find themselves in. Equipped single parent households, have to bear the added with these insights, the report then proposes responsibility of raising a child alone, contributing recommendations that can provide targeted and effective relief to women at risk. 1 Asia Pacific Risk Center 2017. Societal Aging’s Threat to Healthcare Insurance 2 Ibid 3 United Nations, 2013 World Population Prospects: The 2012 Revision, Highlights and Advance Tables 4 OECD Family Database 5 Mercer Universal Position Coding System Framework. Para-professionals Project assistants, Executive Secretaries, Secretaries (senior), Administrative Assistants, Administration Clerks, Committee Secretaries, File Clerks, Administrative Clerks, Messengers, Mailroom Clerks, Records Officers, Library Assistants, Data Entry Operators, Receptionists, Document Control/Records Clerks, Cooks, Food Service Workers, Tea Ladies, Facility Clerks and the like Copyright © 2018 Oliver Wyman 4 INCREASING LONGEVITY AND RETIREMENT INCOME INADEQUACY According to the World Bank, life expectancies at With the APAC region being the fastest-aging birth have increased by 7-14 years across the world region in the world, this pension time bomb during the past 40 years, equating to an average of seems especially concerning. What makes this one additional year of life expectancy for every four issue even more pressing is that more than half years that have passed.6 The increasing longevity of the APAC countries listed in the Melbourne is placing strains on the ability of social pension Mercer Global Pension Index 2017 (MMGPI) systems to provide adequate financial support scored D as an overall