The Financial Services Council (FSC) says there needs to be a comprehensive review of KiwiSaver to make sure it is fit for the modern age.
It says KiwiSaver is 16 years old and is worth $100 billion, so now is the time to look at all aspects of the scheme to check for faults and look for improvements.
Such a review would be done after the election and would need support from both major political parties. It would be non-partisan, and would be carried out by economics or actuarial experts.
It would consider all aspects of KiwiSaver, including the possibility that it might be made compulsory, as happens with comparable schemes in Australia. It would also look at gender issues and what happens when people take time out from making contributions.
The FSC and the Financial Markets Authority (FMA) do annual reviews of KiwiSaver already. But the FSC thinks a far deeper investigation is needed, because KiwiSaver has become so important for so many people.
“The recent news of KiwiSaver funds reaching the $100 billion mark shows the time is right for a detailed review," says the chief executive of the FSC, Richard Klipin.
Klipin says several things need to be looked at, such as the continuity of KiwiSaver membership. He says there are just over three million people in the system, but sometimes they join and then they stop, due to interrupted work patterns, and that can bring them personal disavdvantage.
Another issue would be how KiwiSaver blends in with other retirement schemes, such as personal savings, workplace superananuation programmes and the state-run NZ Super.
Klipin adds the question of compulsory contributions also needs to be looked at.
He says Australia has had a system of compulsory retirement savings for over three decades, which has given individuals a nest egg which is ten times the New Zealand equivalent.
"The average balance in Australia (per person) is somewhere between $240,000 and $320,000 depending on age and the male/female gap, whereas our average has us sitting just under $30,000," Klipin says.
"And their total retirement savings sector is worth $3.5 trillion, whereas ours is $100 billion."
Klipin is adamant the review he wants would be politically neutral but support would be needed from both main political parties to make it work.
However, there does not seem to be much chance of that support being won at this stage.
The National Party finance spokesperson Nicola Willis says a review of KiwiSaver is not her party's policy at this election.
"We are broadly happy with the KiwiSaver settings and how it is working, so we are not proposing any review of those settings," Willis says.
The Labour leader Chris Hipkins says his Government and previous Labour administrations have been constantly trying to improve KiwiSaver.
And he indicates general support for the kind of special, non-partisan review, that Klipin wants.
"I am always open to non-partisan approaches when it comes to savings for retirement."
6 Comments
So the wife was in a government super scheme, match $ for $ up to 10 % of her salary. Able to withdraw at anytime up to 80% of it, if needed. So not locked in. Yet they want the private sector to contribute a higher % and have it locked away until 65. If you need it any %, apart from first time buyers, you basically got to sell your house and prove you are eating dirt. The haves and haves not
Easy, mandatory kiwisaver participation + move towards 10% employer + 10% employer contribution (increase by 1% per year), make kiwisaver contributions tax free by employees (calculate deduction before tax is taken).It wouldn't be as 'equitable', but you would incentivize kiwisaver over other investments.
It is about saving Super and the government's budget in future from pillage by the needs of the old and appropriate future planning. The capital can also be forcibly directed into funding capital investment in NZ. IDK why no party wants to pursue it.
1. It irritates me hugely that both parties have avoided the development of Kiwisaver. Shocking ineptitude.
2. If they made it compulsory, as they should have, it protects the rest of us from the rest of the financially inept.
3. For various contribution breaks and the gender issue the problem and the fix both are not in Kiwisaver. Gender for example, the fix is in incomes generally, not in Kiwisaver.
4. No reason for there to be any tax at all. It's not so much a financial instrument, more a social protection device. So no tax at entry, during, or at exit.
5. Kiwisaver to replace super. It would take a phase in period of say 30 years. Which means a thinking horizon beyond the current 30 days.
6. New Zealand needs to move beyond the debt infatuation and become investors (ie Owners)
7. New Zealanders need to be financially stable on retirement. Independently. Not government dependent.
8. Always there are folk who claim investing wizardry, beyond Kiwisaver. Good on them. They can invest in addition to Kiwisaver. Because as above, with universal Kiwisaver the rest of us don't have to fork out for the indigent.
9. Quite happy with the idea that once you reach certain balances then you don't have to contribute.
10. (edit) the best time to plant a fruit tree is - twenty years ago. Same with bringing Kiwisaver up to speed.
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