AS the echoes of International Women’s Day linger, the call for financial empowerment among women persists, with a focus on retirement planning. Women are being urged to pay meticulous attention to their retirement goals due to several factors that disproportionately affect them.

According to the United Nations Population Fund’s (UNFPA) 2021 State of the World Population report, Jamaican women, on average, are expected to outlive their male counterparts with a life expectancy of 78 years compared to men’s 73 years. This divergence in life expectancy carries significant implications for women’s retirement savings as they are expected to live longer, potentially compromising their retirement lifestyle.

“Women have to be much more focused as it relates to trying to achiev[ing] their retirement goals,” senior corporate manager at JMMB Fund Managers, Camille Steer stressed during an interview with the Jamaica Observer.

Beyond the longevity factor, Steer highlighted additional challenges that necessitate careful retirement planning for women. Disruptions to the work cycle — such as child rearing, childcare responsibilities, and acting as the primary caregiver for elderly parents — contribute to the unique challenges faced by women. The burden of unpaid care, as outlined in the McKinsey Global Institute’s report on COVID-19 and gender inequality, places approximately 75 per cent of these responsibilities on women’s shoulders. Additionally, Jamaica’s gender pay gap of approximately 37 per cent, as indicated by Global Gender Pay Report 2021, further compounds the financial challenges for women.

“Because you have that wage gap or that disparity, even though someone might see a female at the same age contributing, because they have a lower salary or lower earnings they are not going to be putting in as much [retirement funds] compared to their male counterparts,” explained Steer.

Reduced contributions to retirement savings, resulting from these challenges, can lead to women’s pensions falling significantly below the recommended threshold of 70 per cent to 80 per cent of one’s pre-retirement salary — a phenomenon commonly referred to as pension poverty. To address these challenges Steer offered a comprehensive approach to retirement planning for women at various stages of their lives.

In their 20s to 30s the counsel is: Establish healthy financial habits and determine retirement savings goals.

“When you are in your 20s to 30s you want to establish healthy financial habits. From your 20s to 30s you need to determine your retirement savings goal. If you are in a company, you need to enrol in it; if you are not a part of a company that offers it, are you contributing?” she asserts.

40s: Stay on track with retirement goals. Realign if necessary, and assess debt obligations as retirement approaches.

And 50s to 60s: Review asset allocation, retirement portfolios, and anticipated expenses. Ensure savings align with retirement objectives.

The overarching goal is to achieve an income replacement ratio of 80 per cent, allowing retirees to maintain a lifestyle similar to their pre-retirement years. Though the National Insurance Scheme (NIS) is available, research conducted by Pension Industry Association of Jamaica revealed that NIS captures less than half of eligible contributors — and even when one contributes, the benefits may not be adequate to support people in their retirement years.

“Forty-five per cent of people over 60 [years of age] stated that they received a pension of $20,000 or less per month from the NIS,” cited the Pension Industry Association of Jamaica’s (PIAJ) (2022) Concept Paper on Auto-Enrolment.

Considering that at the time of that concept paper the monthly minimum wage was approximately $28,000 ($7,000 weekly), that would mean that most elderly Jamaicans are earning a pension that is 29 per cent lower than the minimum wage. As such, Steer advises that women should diversify their retirement portfolio.

“NIS is the first pillar in building our retirement portfolio. The second pillar is being part of an approved pension arrangement that requires active contributions of up to 20 per cent of your current salary, to give you an extra source of income,” Steer explained to the
Sunday Finance.

She also highlighted the importance of supplemental income such as investments, unit trusts, and bonds. Steer urged women to take advantage of available financial tools as well, and appealed for more support from organisations to bridge the knowledge gap through financial education.

“You need to ensure that your financial well-being is a priority in the whole mix,” she said in a plea to women entrepreneurs.

While other employed women may find it more straightforward to allocate a portion of their salary to retirement, Steer asserts that women entrepreneurs often prioritise building their businesses and maintaining profits, inadvertently neglecting their future financial security. As such, she recommends that women entrepreneurs pay themselves first.

Discrediting the traditional notion of relying on children as a retirement plan, Steer issued a resounding reminder that this is no longer a viable strategy as with shifting societal dynamics more children are returning home, adding to parents’ financial responsibilities.

“It is almost as if you’re playing lotto,” she described. “At the end of the day the odds may not be favourable because they might have their own expenses.”

Steer stressed that the responsibility to secure one’s financial future lies in one’s own hands.

“The journey of a thousand miles begins with one step. If you want to avoid old-age poverty, if you want the life that you deserve, you have to have an aggressive practice about it,” she said encouragingly.