Retirement Commissioner Jane Wrightson calls for making KiwiSaver mandatory and raising the minimum contribution rate to 5%.
Tuesday, September 27, 2022, 6:00 AM
But she doesn’t think the current government is brave enough to make these changes, which she believes are necessary for KiwiSaver to remain fit for purpose for a net 30 years.
However, Wrightson believes that a “waiting government” could be persuaded. And she’s asking the financial services sector to work with the Retirement Commission and make some recommendations to the current government.
“There is a very good opportunity for the industry at the moment,” she says. The government’s planned review of her KiwiSaver has stalled due to Covid-19 and other priorities. That means the industry has a slim chance of agreeing and submitting improvements before the Minister. But with elections looming next year, “the time is limited before this door closes.”
Wrightson’s comments came during a panel discussion on what KiwiSaver could look like in 2050 at the Financial Services Council’s annual meeting in Auckland last week.
According to Wrightson, FSC’s own survey showed that 78% of New Zealanders support compulsory donations to KiwiSaver. But what can we do for those who really can’t afford it, the roughly 20% of the eligible population?
“The problem is that questions often dominate discussions,” she said.
“I know the problem. We are still a low wage economy so there has to be a floor below that that is not needed. But if you look at us compared to Australia it’s easy It’s not a matter of
KiwiWealth CEO Rhiannon McKinnon suggests a tiered approach where people struggling to save start donating 1% of their income to KiwiSaver, with donation levels increasing over time. increase.
Another method, according to Wrightson, is to force only those new to the workforce to apply.
However, she believes a rebrand is needed. “I don’t think people see KiwiSaver as a retirement plan. They see it as a savings plan,” she says. That became very clear during the lockdown, with a surge in difficult withdrawal applications.
More research is also needed on initial homebuyers and whether they continue to donate to KiwiSaver after making withdrawals to fund their home savings, she said.
“We don’t have enough data. Are they contributing the same or more, or are they more focused on mortgages? The council will look into it a little more rigorously next year.”
Susan St. John, Associate Professor of Economics at the University of Auckland, forcibly endorsed Wrightson. But it has a fundamental weakness. Full-time, he built an uninterrupted 40-year career and built on the traditional male model of working paid jobs, which makes him unsuitable for most women and “not good for many men either.” ”.
She and McKinnon said there is growing awareness about gender issues and Kiwi Saber, especially among women themselves.
St John wants his employer’s contribution (currently 3%) to be paid to his employees regardless of whether they contribute to KiwiSaver. Women are at a significant disadvantage as they miss 10-20 years of absenteeism as paid childcare workers.
“If you think about it carefully enough, there’s something you can do about it,” she said.
“We have to realize that KiwiSaver is a high-income program suitable for Pakeha people. Yes, they make very little profit and by the time they retire they find their position eroding.”
Nigel Jackson, Westpac’s investment director, said part of the problem is that no one in government is responsible for KiwiSaver. He says the industry needs to start influencing policy debates in four key areas: participation, contribution, access and exit, and investment risk.
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