Women have come a long way since the days of fighting to enter the work force, but their defined contribution plan balances still lag those of their male counterparts, according to a study by Fidelity Investments, Boston.
First, the good news.
According to the "Building Futures" study of the 6,969 defined contribution plans for which Fidelity was record keeper in 1999 (comprising 6.2 million participants and $396 billion in assets), there were no large differences in men's and women's deferral rates, with an average of 65% for men and 62% for women, said Kathryn Hopkins, executive vice president of Fidelity Institutional Retirement Services Co. This is the second year for the study, and the first time Fidelity has analyzed the data by gender. Some 37% of the participants included in the study were women, she said.
Women's investment practices also were not dramatically different from men's, she continued, adding "women are better long-term investors. They are more goal oriented and do not make exchanges as often."
While choices of high- and low-risk investments were similar between the sexes, women tended to be more diversified, holding a higher average number of investment options.
The rest of the picture, however, is more grim.
The study also found the average account balance for female participants was $43,000, while the average balance for men was $77,000. The primary reason for the disparity is that women earned significantly less than men and therefore had less opportunity to accumulate higher retirement savings. "Women tend to go in and out of the marketplace, and they are overrepresented in the lower compensation levels," Ms. Hopkins said. "It's a good argument for the catch-up provisions in the federal (pension bills)."
While 57% of women earned less than $40,000 in 1999, only 29% of men did. And some 56% of men earned $50,000 or more, while only 27% of women earned that much.
The gap between women's and men's average account balances increased with age, the study found. For participants between 65 and 69 years old, the average account balance for women was 47% of the average for men.
"This was not necessarily good news for the women in my department," Ms. Hopkins quipped.