23 February 2022

Care Credits For Pension Entitlements Making Little Progress

State officials are looking at proposals intended to improve the status of women in retirement. But there is no sense of urgency in their work and no indication that any breakthrough is imminent.

At issue are so-called care credits, which would give pension entitlements to (mainly) women for time out of the workforce while they raise children or perform some other vital social function.

They were proposed two years ago by the Retirement Commissioner. The proposal was not taken up by the Government at the time. Two years later, ministers and departments produced minimal responses to requests for information about what if anything they might do about this.

This issue does not affect NZ Superannuation (NZ Super), which is a universal payment, and is often praised for that fact. But NZ Super is not enough to live on, so it needs to be augmented by private pension schemes. These have a well-documented bias against women, since time out of the workforce means their contributions can decline or stop entirely. In addition, they often fall behind in the race for promotion and end up with less money in pension schemes on average than men.

Statistics NZ has reported the difference in superannuation savings between women and men is more than $30,000. This problem was taken up in a report by the Retirement Commission in 2019.

“We recommend the Government consider the introduction of care credits for New Zealanders undertaking unpaid caring roles, that are often so valuable for families and the community.” the Commissioner wrote.

“We think this could make a significant difference for many New Zealanders who prioritise care for others over their own future wellbeing, by foregoing income and employer contributions.”

Personalise your retirement income with Lifetime

Lifetime Income Projection

This call has languished for two years since it was first issued. However, the issue re-emerged in a report late last year by the US finance and research firm, Mercer. It compared retirement funding among developed nations. It ranked New Zealand 15th in the world and gave this country and many others in the world bad marks for gender inequity.

The report argued care credits could be a way of overcoming the disadvantages many women face in providing for their retirement. But it proved difficult to find out what the Government thinks about all this, and what if anything it would do.
A call was put into the office of the Minister for Seniors, Ayesha Verrall, who declined comment and passed the matter on to the Minister for Social Development, Carmel Sepuloni.
But Ms Sepuloni didn't comment either. Her office referred the matter to her own departmental officials. They in turn suggested the Ministry for Business Innovation and Employment (MBIE) was best suited to give a response.

MBIE in fact DID comment, saying it was working on working on the recommendations from the Retirement Commissioner’s report from 2019.

“This includes identifying recommendations which need more detailed consideration… there is no set timeframe for this work within New Zealand,” MBIE said.

But in the course of saying the matter wasn't urgent, MBIE said a political response would emerge. However, nothing happened, despite another request for comment from Ms Sepuloni's office, and the matter being referred to yet another Government leader, the Minister of Commerce and Consumer Affairs, David Clark.

He later produced a brief response.
“The Retirement Commissioner’s report from 2019 includes recommendations which need more detailed consideration, as well as considering other options for improving retirement outcomes for women.”

The problem of care credits is less of a problem for highly paid women in top jobs for corporations or big law and accountancy firms. They are generally able to negotiate good maternity provisions as a condition for joining the company in the first place.

In addition, some companies maintain employer contributions to Kiwsaver schemes during maternity leave. But many women miss out on these advantages.

Photo of Eric Frykberg
Written by:

Eric Frykberg

Semi-Retired, Eric worked in journalism for 45 years across print, radio and television, in New Zealand, Australia and Britain. He has specialised in business, finance, energy, mining, transport and agriculture. He was also foreign correspondent for RNZ for many years. He can be reached on