Give women more financial muscle

THE recent comment by Permodalan Nasional Bhd (PNB) Group CEO Datuk Rahman Ahmad that PNB’s lack of growth in its assets under management (AUM) was partly due to Malaysians not saving enough caught my attention.

Over the past 25 years, I have been involved in the investment management industry, so I find it very interesting that the largest fund management house cites a change in savings behaviour as one of the reasons for its lack of AUM growth, and is emphasising financial literacy as a solution.

To take Rahman’s assertion one step further, I would argue that focusing on women’s financial wellness is in fact a great way to solve many of society’s problems.

There are no verifiable statistics on women’s savings in Malaysia, but the message is clear: Women may be the main caregivers for children and ageing parents, but they tend to save and invest less.

The Gross National Savings rate in Malaysia has been declining for many years with the latest number for December 2023 being 23.85%, compared with 38.52% in 2008. The savings rate has fallen by 38% over 16 years!

Gendered impact of reduced savings

The decline in national savings rates unfortunately affects women disproportionately for several reasons:

1 Lower workforce participation: There is a financial imbalance between Malaysian women and their male counterparts due to the lower labour force participation rate of 56.2% compared with 82.3% among men.

A significant number of Malaysian women have no choice but to rely solely on their spouse’s income partly due to cultural norms as well as lack of opportunities or simply due to rising costs of living.

This dependence limits their personal savings and investment opportunities, making them more vulnerable to financial instability and at risk for more financial abuse.

2 Longer life expectancy: Statistics Department data shows that women in Malaysia have a higher life expectancy than men, living on average 77.2 years compared with men’s 72.3 years. This necessitates more substantial retirement savings to ensure financial security in later years.

3 Financial literacy gaps: Multiple studies have shown that financial literacy significantly influences saving habits with many surveys showing that financial literacy in Malaysia is still low.

Women with lower financial literacy are less likely to engage in effective saving behaviour, impacting their financial well-being. With better financial literacy, it is also less likely that women will fall for scams. In Malaysia, there were more than RM195mil losses due to online scams, which account for more than 85% of more than 5,000 reports received by the police for 2024..

Empowering women through financial initiatives

The financial empowerment of women requires a targeted and concerted effort by multiple stakeholders:

Financial education programmes: Enhancing financial literacy can improve saving habits and investment decisions. Educational initiatives can equip women with the knowledge to manage their finances effectively. Habits form early and thus it is imperative that financial literacy programmes are taught in primary schools.

Encouraging workforce participation: Creating flexible work opportunities and supportive policies can help women balance family responsibilities with careers, enabling them to contribute to household income and savings.

It would be wonderful if decision makers recognise the burden on women and ensure that parental leave should not be only for mothers but also fathers as it does take both genders to make a baby.

Promoting investment platforms: Institutions like PNB and other fund management houses like Principal Asset Management can develop products tailored to women’s financial needs, encouraging them to invest and grow their wealth independently. With power comes great responsibility.

Everyone benefits

Encouraging women to save and invest isn’t just good for them – it’s good for the entire economy.

Increased economic growth: If more women actively save and invest, the gross domestic product could increase significantly. A World Bank study found that removing economic barriers for women could boost Malaysia’s income per capita by 26.2%.

Stronger household financial security: When women save and invest, they contribute to a financially stable household, reducing the risk of poverty and of their children falling victim to crime, especially in single-income families.

More women in entrepreneurship: With better financial literacy and investment confidence, more women could start businesses, further driving economic innovation and job creation.

More resilient retirement system: Women with personal savings and investments reduce dependency on government aid, easing the burden on the retirement and healthcare system.

The decline in savings rates presents significant challenges, particularly for women. By recognising the importance of financial independence and actively investing in their future, women can take control of their money, reduce financial vulnerabilities, and contribute to the country’s economic resilience.

The time to act is now –because a financially empowered woman isn’t just securing her future; she’s uplifting her family and the nation.