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Financial Services Council says allowing renters to access savings for bonds is wrong but should at least provoke debate

Public Policy / news
Financial Services Council says allowing renters to access savings for bonds is wrong but should at least provoke debate
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Proposals to allow people to pay rental bonds out of their KiwiSaver accounts should be of great concern to all New Zealanders, according to the Financial Services Council (FSC).

Its chief executive, Richard Klipin, says anyone suggesting ideas like this should think very carefully about what impact they will have on long-term savings.

Klipin's comments follow a National Party proposal to allow young people to pay rental bonds out of KiwiSaver funds.  Already, first home buyers and others in special cases can access KiwiSaver funds to help them with a house purchase. 

National calls its proposed reforms regarding rental bonds a "common sense" policy which will help young people into flats. In addition, the bond money would be returned to KiwiSaver accounts when a tenancy ends.   

There has already been criticism of National's promise, much of it calling the scheme a short term fix to the housing crisis when substantive, long-term reform is needed.

The FSC has now joined that criticism, saying it will be costly in the long run, even if it does deal with a pressing current problem. The FSC has 114 members, who manage funds of more than $95 billion. Besides KiwiSaver providers, the FSC represents insurers, fund managers, workplace savings schemes, professional service providers, and technology providers to the financial services sector.

“The policy does address a real concern for young Kiwis with research showing they are feeling the heat of the rising cost of living crisis," Klipin says.

“Our research finds that that younger Kiwis are disproportionately affected by cost of living issues."

But Klipin says KiwiSaver is not there to fix this problem. It is designed to be a long term retirement and savings tool, and this fact must be borne in mind.   

“We want to ensure that the thinking behind this policy has considered the impact of reducing the KiwiSaver balances of young New Zealanders and therefore the flow-on effect on the long- term earnings of their KiwiSaver accounts," he says.

“Even small changes to policy settings can have considerable effects on KiwiSaver earnings over the term of the investment."

Klipin insists policies being taken into the election campaign must be "well designed" and they must focus on the long-term investment horizon for New Zealanders preparing for their older years.  

“We are calling for a full review of KiwiSaver to ensure policy settings go to the heart of its core purpose to prepare Kiwis for a dignified retirement," he says.

"That will mean setting a long-term strategic policy direction for KiwiSaver."

Klipin adds he hopes that a policy he deplores will at least provoke debate on the larger issues facing retirement savings.

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When are we getting mandatory superannuation for PAYE employees and untaxed gains?


Yes of course it is wrong but so was allowing the money to be used to overinflate the property market to help buy property. 

The allowance just highlights that people are needing to access their long term savings just to provide for short term shelter.

It highlights just how broken the system is.


Appalling idea.

Kiwisaver should be inviolate. I’m a Nat voter and this is plane dumb. Key mucked around with contributions and now this. Trust needs to be built. This erodes it.

Luxon, you turkey. Be smarter.


The thing is that it makes national look like it is run by people who don't have much of a financial clue, and who don't know what they are doing. They are of course blaming the Young Nats, which was just odd for them to say, and distancing themselves from it, which IMO shows how politicians act when they will throw others under the bus . I am actually a National of a bad lot...but this sort of thing is giving me a reason not to vote for them. Not because it doesn't affect me, but because it is just friggin stupid. Luxon won't want to get involved with this, it has been farmed off to his underlings.