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Transcript

KiwiSaver Is An Election Bidding War · Making Cents

• 0:02
  Hey team, it's Frances Kiwisaver is shaping up to be one of the key issues of election 2026.
• 0:09
  National, Labor, New Zealand first, the Opportunity Party and the latest is ACT all suggesting changes to the scheme.
• 0:17
  So the lovely TVNZ Breakfast team asked me to come on to talk about it.
• 0:22
  However, I really want to be sure that I'm getting my facts straight on this.
• 0:26
  So rather than give you my usual breakfast chat, I I thought what I'd do is read through my column for you to make sure everything in one place, I haven't missed anything and you've got all the facts there
• 0:40
  for you.
• 0:41
  So here it is, my column for TVNZ and breaking down what's happening in the Kiwisaver Election.
• 0:55
  Season has turned Kiwisaver into a bidding war war.
• 0:59
  Most of the parties have an idea of how they want it changed.
• 1:02
  National wants it to be compulsory, with workers and employers each putting in 6% and babies getting a $1,500 start to kick off their savings.
• 1:13
  Labor wants to make only the employer contribution compulsory, but also bring that up to 6%.
• 1:19
  And don't think the minor parties are going to miss out on the retirement savings debate, with New Zealand first pitching for both employees and employers to contribute 10%, while the Opportunity Party wants KiwiSaver 2.0, a brand new scheme
• 1:35
  where employer and employee contributions rise to 6%.
• 1:40
  Just this week, ACT threw their hat into the ring, declaring they'd take off the tax on earnings made through Kiwisaver Investments but pay for that by axing the government contribution of$260.72 cents each year.
• 1:54
  The devil is in the detail, but almost everyone is looking at a version where you need to put more into your Kiwisaver.
• 2:02
  It comes as Kiwisaver hurtles towards its 20th birthday, now sitting pretty as an established part of our financial lives, so any changes are a big deal.
• 2:13
  Done badly, it hurts the people who can least afford it.
• 2:17
  Done well, it eases the looming problem of unaffordable retirement years.
• 2:23
  So what do the experts think?
• 2:25
  Independent financial commentator Bernard Hickey sees Kiwisaver as a big part of the solution to our retirement headache, but isn't impressed with the solutions on offer so far.
• 2:35
  People often look over to Australia when they say we need to have higher contributions, but he points out we're not getting the promise of the sweeteners that they also get.
• 2:45
  Here's what he had to there's no way the Australians would have got that scheme across the line in the early 90s unless they had an incentive to save.
• 2:54
  In Australia, you contribute money to a compulsory pension scheme and you don't pay tax on it.
• 3:00
  KiwiSaver, you pay the tax first and then you put what's left over into the scheme.
• 3:05
  There's no incentive.
• 3:07
  So national and labor are both now talking about compulsion without compensation.
• 3:14
  Now, he's not wrong.
• 3:15
  Reduced or even entirely removed tax is really common in other countries in order to get people to save more for retirement.
• 3:24
  Why?
• 3:25
  It's usually cheaper overall to have people save for their own retirement, so it's worth it.
• 3:30
  So if KiwiSaver was to be made compulsory, he says that would need to be balanced with tax incentives for the extra savings.
• 3:38
  He adds that total remuneration should also be removed as an option.
• 3:42
  That's when employers pay Kiwisaver as part of total salary instead of on top.
• 3:47
  And there should be further incentives provided for self employed people who are currently left mostly in the cold.
• 3:54
  Now, if you listened to last week's episode with our new retirement commissioner, David Boyle, you'll know he's more cautious on the idea of increasing contributions than he used to be.
• 4:03
  Here's what he had to say on that.
• 4:05
  It's a little controversial, but just putting contribution rates up all the time doesn't necessarily support all New Zealanders to have a better financial outcome in retirement.
• 4:16
  That sounds a little counterintuitive, but the group I'm talking about here are the lower income earners.
• 4:21
  We have to be very careful because if someone is on the edge now, this could put them into some more difficulty, which might mean that they will then need to use their Kiwisaver for a hardship withdrawal.
• 4:34
  Boyle also points out that Kiwisaver isn't working so well for self employed and contractors as well as women who often take time out of paid work to care for family.
• 4:45
  And he's got an eye on the issue of total remuneration, saying it's a problem that is outside the spirit of KiwiSaver.
• 4:53
  EnableMe financial advisor Katie Wasney also has a wish list for politicians that starts with removing total remuneration packages.
• 5:01
  Then she suggests that the system be changed so that employer contributions keep going even if a worker pauses their own.
• 5:08
  Similar to how it works in Australia, Wesney says it's one way to make sure compulsory measures aren't as hard on low earners.
• 5:15
  Here's what she had to say on that.
• 5:17
  I would really love if we could decouple the employer and employee contribution because I do worry about our people who are earning less.
• 5:26
  It's such a big chunk, and they're the people we want to be protecting the most in terms of making sure they're okay longer term.
• 5:33
  But she does make the point that even if this does become the KiwiSaver election, whoever ends up making changes after the election should make sure that they do it properly so that they can last for years, she said.
• 5:47
  Once we've fixed these things and made it future proof, I'd like us to stop tinkering as well, because I think that decreases the confidence in Kiwisaver conceptually.
• 5:58
  Now all of those people are on the Making Sense podcast in earlier episodes.
• 6:01
  You can listen to them all the usual podcast places, including wherever you listen to this.
• 6:06
  But I'd love to know will the KiwiSaver chat sway your vote this time around, or are you watching other issues more closely?
• 6:13
  Drop it into the comments.
• 6:14
  Let's talk about it, and let's see if this really does turn into the KiwiSaver election.
• 6:19
  Until next time, have a great day.
• 6:21
  This podcast can only give you general information about how things work in most situations.
• 6:26
  It's not individual financial advice.
• 6:28
  If you're after that, a financial advisor is always the best bet.