The latest statistics - http://www.kiwisaver.govt.nz/statistics/ks-stats-10-04-30.html - show 1.4 million people have signed up to KiwiSaver.

Investing all/most of the Kiwisaver funds in stock market is not a very good idea. Remember the recent GFC and the fall in the wealth of Ameican savers who put heaps of money in Individual Retirement Schemes.

If Kiwisaver is made compulsory then the Government must guarantee a miinimum return and also safety of investment. Such a scheme is operating in countries like India, callled Public Provident Funds.

Peter Johns uses the pronoun I twelve (12) times and the personal pronoun 'my' twice. Sorry buddy, the national economy is not all about YOU!

Well said Peter Johns . Sounds 'like you've got your plan working well for you . And it is your munny . Not the politicians / the NZX / nor the screeds of fund managers who want a slice of the action . All power to you , man !

A gent by the name of Winstone Peters once proposed such a thing, a referendum came around, and 90+% said no. There are plenty of Peter Johns out there, who, based on his savings plan, has no interest in anyone paying him a pension, so is pretty happy to live off the $20k net per annum his 500k gives him once he retires.

Why do the pleas for compulsory super saving schemes usually come from those people who benefit most by having those schemes being forced rather than voluntary for the citizens of this country? How will those people who can't save without compulsion, save suddenly (or even over a few years) 10% from the same pay packet? Unless the wages rise for those unable to save, what do you achieve? Then the big question is, where are those rising wages coming from? Suddenly improved productivity by 10%?

We need more funding in future for pensions if people want a pension in future, so call it a new pension tax. Then the next great question will be, is the government really the best investment fund manager in the country? I am sure they are not, even if they contract that this function out to commercial parties.

I for one, would rather save in the ways I see fit rather than a government appointed commercial provider, or anyone else for that matter...

We actually already have compulsory super superannuation, in the form of taxes. Unfortionalty many people are conditioning NZers to believe that in the future this may not be available or affordable. I believe that people should make their own decisions regarding additional money they may want in retirement, but in the end under our current system, there really isn't much incentive to save, and many financial institutions have failed, which lead to many people losing their lifes saving. Best place in NZ to put your money is property. Best to spend and enjoy your money while you are young and can enjoy it, you come into this world with nothing, and leave with nothing.

Was the Winsome Peter's referendum on super rejected because people didn't like the compulsory aspect of the plan , or because they neither liked nor trusted Peters ?

I think it is good to have the option of the KiwiSaver scheme, but making it compulsory? No, thank you very much. I don't like to be told what to do. If people are too immature to realise that they need to save and can't just keep on spending everything they earn their whole life maybe they need to go back to primary school (and listen this time around).

And rather than "Without compulsory superannuation New Zealand is destined to become an economic backwater." I'd say "Without a big change in mentalilty, New Zealand is destined to become an economic backwater."

Those who haven't saved enough will far outweigh those who have saved. With life-expectancy going up retirement will be approx 25 years. The winners/losers ideas is still costly, unless we adopt some end-of-life policy. Maybe when ones cash runs out it's time to call it a day

Elley how about with a population of 4M combined with geographic isolation NZ is an economic back water. No matter how mental you are you can't change that.

Anyone know of someone without insider information that has retired on a retirement savings scheme such as those sold by AMP, Fidelity Life, etc etc

Always told at school to only invest money in the sharemarket that you could afford to lose, bit at odds with current superannuation thinking which appears to be you cannot afford to not invest in the sharemarket. Hmmm

I'm for it in theory. Although it's probably too late now.

However, big question marks over the competance and integrity of the NZSE, advisors, & NZ business in general. Not too many local blue chips to invest in.

Personally I would prefer a hybrid version though. Assuming similar to the current govt super of 60% of the average wage. I would like something like the govt guarantee 30% of the average wage in Govt Super, and the rest is made up of private compulsory super savings. Therefore would not need the 12% (or 9%) compulsory rate like in Australia, but something lower.

@Elley: hey what's this about downgrading? Now I'm offended. (kidding)

...New Zealand is destined to become an economic backwater.

Destined? Since when has NZ not been an economic backwater?

Yes, I know Kiwis love to kid themselves that "The whole world is watching us!!!!11", and that, say, some rich guys in an expensive boat pottering about on the harbour will "Put New Zealand on the map!!!!111", but are we really still naive enough to believe that we're not an economic backwater?

@HAHAHA... fair comment!

Anecdotal evidence I picked up when working for a few years on the continent suggests people there universally think of New Zealand as a banana republic similar to other islands in the pacific. Economy? They have lots of sheep don't they?

Unlike culture and art or advances in design, technology or even manufacturing, sheep and cows don't impress people much; think of the scenes from Borat in his home country.

It may however turn out to be a blessing in disguise that nobody gives NZ a second thought; just give it a few years...

Nyet ! Not good you make small think of homeland of ancestor Kazakhstan . Beautiful scene . You cows ! You sheep ! Us is grand culture of nomad and goat . Kiwi is beak in ground , bum in air . Good cymbel you got . Yahhhhhhhhhh !

[...] original post here: Blogging On Interest Rates, Economics & Business in New Zealand New Zealand Travel-See the South Island In 15 Days | Twitravel … taba wicsc [...]

Would compulsory superannuation deepen NZ's capital markets?

I see that said a lot, but is it necessarily so?

Australians invest their retirement savings predominantly in Australian equities. But doesnt that mean that their retirement savings are just another play on the Aussie market? If the Australian economy tanks (lets say because China goes busto) then both the investors income AND assets would be affected negatively.

Another quesiton, could compulsory super in Australia have inflated asset values? Making them inherently risky?

Also, the relationship with China is what saved the Australian market, not compulsory super. Though I could imagine that the weight of buy-and-hold money invested by Australians saving for retirement could have supported asset prices to a certain degree.

@Martinv - Apologies for any devastation caused ;) I'm sure you realised the comment was not specifically aimed at you. And RT, thanks but no, not tempted. Gosh, never realised this was a dating site...

Kiwisaver has up to 100% return on your money -GOVT GUARANTEED!
If you put in $20 per week, you will get $20 per week from the Govt (ie every other taxpayer). And its guaranteed (for the time being...but better to get it now than whinge and procrastinate and not get it....right?) The returns aren't guaranteed, nor should they be...they already give you $1040 free money.
Sure pay off your mortgage, but join kiwisaver too. You CANNOT get a better return than 100% govt guaranteed. If you don't do it (and you are eligble) you're a mug....but thanks for the $20 a week you're paying me!

Stop the press....no munny left for saving....all to be sucked out by the councils and the govt to tart up the rotting buildings that were built to Branz govt standards with shite materials flogged by ethical companies.

Bollocks! Get rid of the walfare state and problem solved! No more WFF, no more DPB and open ACC up to competition. People who payed taxes their whole lives on the basis of the financial cushion at 65 can not now have the rug pulled from them. As we become too old to work then the state in any deserving OECD country must step up and provide assistance. If not then give everyone a cheque now based on years of work and end it.

"Compulsory superannuation has been an unmitigated success in Australia and has helped transform their economy."

what rubbish! natural resources did that, not CS

@ Justice, I'm guessing HT is referring to the $1040 p/a that the Govt chips in provided you contribute the same ($20 p/w). That's a pretty good deal for the average Kiwi who wouldn't have the discipline or knowledge to invest in other ways.

This doesn't really require any debate and should have been done 20 years ago. Clearly most people aren't saving enough and need to be forced to save. If they don't, those of us who have saved for our retirement will pay for them later!

What you put in and what the government gives you may or may not be safe down the long years, but every year the managers of the funds get their revenue up-front. What a sweet deal for the corporates. And they get to play around with other people's money too, building up careers and palaces for themselves.

# Dave Smyth Says:
May 17th, 2010 at 6:22 pm

This doesn’t really require any debate and should have been done 20 years ago. Clearly most people aren’t saving enough and need to be forced to save. If they don’t, those of us who have saved for our retirement will pay for them later!

Maybe a nice big Capital Gains Tax of 50% will help put saving in the right direction Dave? Property being the only focus is part of this problem, particularly 'second' properties which need a CG tax big time

"Dump social welfare and all this mess just goes away."

Exactly...
The stupidity of it..
We have those ppl who clean our toilets, look after our aged, often on 2 or 3 jobs, trying to support a family on an income that impossible to do so, so the Government gives them 'top up' and still cant afford a few extra $ to save for super.
While the fat cats up the top earn multi $100,000 and even multi million $ salaries.
And it is these same people who clean their offices, look after their parents and grand parent, then out of the goodness of their hearts..as a thank, give them a bunch of bloody flowers (maybe) to make themselves feel like good people

This country can afford only X amount in wages and salaries...
We need the Government subsidies removed to low income workers and a fair wage.
Not pay them next to nothing, and then thru out taxes have to subsidise them...
And who pays these taxes to do so? the low to middle income earner....very convenient for the fat cats and their trusts and loop holes at the top.
I dont begrudge CEOs and their executives earning huge salaries at all....I do begrudge them doing so at the expense of the rest of our society...
I cant rem the actual stats but when the top 10% of salary/wage earners earn something like 90% of the avalible wage take...something is very wrong and till this is fixed as a country we can fiddle the figures as much as we like but it will not make the problem go away.

When seat belts came in they became compulsory. We now accept that rule.

Many people are smart enough with enough income to save well.
Others are not so smart and do not do the best thing.
Make 'seat-belt superannuation' compulsory for those who do not save.
For those who do and can prove that they save enough even by paying down a mortgage, if enough is being paid off, then they are not bound to the compulsory seat-belt super. Or if they are saving into some other investment, then they also can opt out.
So it is an opt out system. Voluntary for some. Compulsory for others. If anyone wants to opt out, it requires an annual declaration. Who do they give it to.

To avoid bureaucracy, every voluntary saver must file a simple proof with a chartered accountant. If you are saving now, you almost certainly have an accountant so one bit of paper which you sign will not cost anything. No more government departments to check on such things. Just one simple regulation of the private sector. Get rid of too much taxes by getting rid of too much government spending.

Life would be one helluva lot simpler if we had a lot better regulation against baddies like the finance co lot and one helluva lot less regulations about good behaviour like none. The difference is simple - it is called harm.
That is apart from order type rules such as it is better that we all drive on the correct side of the road. Right?
THE IRD and GST codes must be the most complex set of rules ever created. That complexity shows the stupidity of them.
There is nothing wrong with the private sector system. It is called invoicing. It seems to work quite well.

The financially aware contributors to this blog don't need compulsion but we are a tiny minority and thus not really relevant to the discussion. Veedub's observation that the vast majority won't do it themselves, says why we have to.
The cellar dwelling Kiwi battlers and those who through misfortune or bad decisions genuinely can't afford it are often cited as a reason against compulsion but they are also irrelevant to the discussion - they are welfare saftey netters and most always will be.
The huge group between which used not to give a damn about super ( but is now slowly starting to wake up ), is the target but their attitudes are not changing quickly enough and require the sharp stick of compulsion applied or it just won't happen. And happen it must if we don't want a severe dose of the mediterranean diet.

Savings good, compulsion not good. Incentivise, don't dictate - there's too much of that as it is.

http://www.interest.co.nz/ratesblog/index.php/2010/04/26/top-10-at-10-fa...

"I’d like to debate this Singaporean originated idea, “One of the more radical suggestions was introducing compulsory superannuation and then using contribution rates to control inflation.”

Firstly, is compelling people to save via a national compulsory saving scheme going to be sustainable, especially given NZ’s financial landscape? Won’t some people be a little concerned about losing control of the management of yet more of their incomes? Would it not be better to allow people the choice of how to save and simply bolster Kiwisaver with more incentives? With a more balanced tax system (less favour to land/property investment) if people don’t save then it might well be down to the quality of providers, and IMO, people should have a market choice in this regard, rather than have none at all, as with a national compulsory scheme? A comparable capital base for investment could still be built up in such a way. [With some focus on NZ enterprise?] However, I appreciate it may not yield the ammo for the specific purpose of managing the exchange rate, as per Singapore, which I do not think it’s necessary, if we make our currency less attractive to ‘carry’ by being able to sustain relatively lower interest rates, for instance by more extensive use of ‘the ratios’, etc:

http://www.interest.co.nz/ratesblog/index.php/2010/04/22/top-10-at-10-wh...

Next, in terms of varying contributions to control inflation, why should everyone take the heat for those who are actually causing money supply inflation, that is, those taking on credit? Why not use methods that more accurately (adjust capital adequacy requirements for specific asset classes, see link above) and effectively, precisely target those who are taking on credit? For example:

http://www.interest.co.nz/ratesblog/index.php/2010/04/22/top-10-at-10-wh...

Cheers, Les."

veedub Says:

"I think where Steps, Expat, Ian Ryan et al are coming from is that MOST Kiwis won’t and/or aren’t capable of doing it themselves...."

MOST ??? I do not rem saying most....
I DONT know if it is most, a lot 1/2 or 1/10th
But it is a enough to have a significant effect right?

And if so, for the overall good of society, then there is a strong case is there not?
Crap I sound like a bloody communist....
They have done a good propaganda job on Kiwi Saver, a good proportion of the population has signed up....when the % gets high enough there will be enough public support to make it compulsory. Few will jump up and down, make a big noise about I I Me Me, and the majority will let it go thru.
When? this budget?, next yr? yr after?
But it will happen....the talk is already happening...isnt it?

steven Says:
"tis crazy to be forced into kiwisaver while having mortgage debt..does not compute…Im paying down my mortgage, if I had to contibute 4% I couldnt do that….dumb as."

We are little in the same boat, but still have to disagree.

@ Justice

Maybe a nice big Capital Gains Tax of 50% will help put saving in the right direction Dave? Property being the only focus is part of this problem, particularly ’second’ properties which need a CG tax big time

Go ahead and bring in CGT. It will push prices up... great for us existing landlords who aren't selling!

Incentives are all very well but there's still a large chunk of the population that won't save no matter what. Rather than burdening those that did save with them just when we want to retire... force them to look after themselves!

Yet another sod with his finger in the pie, sorry Mr Glass, go out and do some real work and keep your blood soaked mitts off my spondalees. I have had it with all the great and wonderful finance dudes who think they can look after my money better than me. The casino that is financial markets now is no place for my dollar. I want to spend my money on cattle... it grows, it then feeds people. Which is more than I can say for a funds manager dude, playing with computer programmes in a messed up world where $700 trillion of bets are taken.

Dave Smyth Says:
May 18th, 2010 at 7:09 am

Incentives are all very well but there’s still a large chunk of the population that won’t save no matter what.

Yes, they're called "property investors".

And I love this part:

Rather than burdening those that did save with them just when we want to retire… force them to look after themselves!

Good ol' self-interest to the fore. Any pretense of caring about anybody else or the nation just went up in a puff of smoke.

At least you're a landlord and therefore bulletproof and infallible. Not to mention devoid of savings. Here's hoping your 'Rich Asian Immigrants' fantasy comes true and saves your retirement future, huh?

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Wow, a lot of interesting points made, but even more self interest. My self interest is that most people wont save enough for their retirement and healthcare costs. As Mr Glass points outs these are a growing issue mainly due to demographic trends. So the comments like most people are thinking about how they live today, not in 30 years worry me. I'm worried because if they don't save people like me will be funding them. And our kids will be funding them through much higher tax rates, or will they be smart enough to desert NZ. I think the latter. Does that not worry you guys?

As for the fact that most of you are already saving, which should be no surprise given this is a financial website, we're not talking about a lot of money here, a few percent of your wages. Personally I use my Kiwisaver account to diversify my overall portfolio in areas I dont have the expertise to do myself. For me that is international equities. In my view most of our retirement expenditure is not NZ dollar denominated, think cars, electronics, travel, even food (dairy is priced in USD). Shouldn't you have a decent chuck of savings in something other than NZD? One day we'll have a foot and mouth outbreak. What do you think will happen to the NZ dollar and your purchasing power then?

It is hard to be positive about the longer term outlook for NZ with the way things are going at present. Good on people like Mr Glass for speaking out. It may benefit him, but i still think he's right.