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The 3 Things That Decide Your KiwiSaver Balance (In Order) · Making Cents

• 0:00
  There's a new person checking the rules on your Kiwisaver and that means the rules might be about to change.
• 0:07
  David Boyle has just started as New Zealand's retirement commissioner.
• 0:10
  It comes after years of working in the financial industry, helping people build wealth through the share market and manage funds.
• 0:19
  Now he's switching teams, going from the private sector to public, and is going to be the guy who helps set the direction for all of us so that the average New Zealander can build a nest egg.
• 0:30
  They can rely.
• 0:32
  Are we getting it right or wrong?
• 0:35
  At the moment where it's not working as well is the non pay or the self employed contractors?
• 0:44
  Hello.
• 0:45
  Yes.
• 0:45
  Because look, many of us already have a lot of pressure on our money.
• 0:50
  We want Kiwisaver to be something we can rely on, something that really helps us out.
• 0:55
  The previous retirement commissioner already gave a parting shot on her way out the door, warning that we need to stop tinkering with KiwiSaver every five minutes or people will stop trusting it.
• 1:06
  So what does the new guy make of that?
• 1:09
  You know, just putting contribution rates up all the time does not support all New Zealanders to have a better financial outcome in retirement.
• 1:18
  Welcome to Making Sense.
• 1:19
  It's the podcast for people who want financial freedom without giving up their coffee.
• 1:23
  Hi, I'm Frances Cook, a financial journalist and fellow financial freedom seeker who makes money simple for you.
• 1:29
  And today we're finding out what New Zealand's new referee for your retirement actually plans to do with the whistle.
• 1:36
  This episode of Making Sense is brought to you in partnership with Odoo, the all in one business management platform that brings everything you need to run your business into one place, fully integrated and actually affordable.
• 1:49
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• 1:54
  I want to help as many people as possible build a better life for themselves by understanding and taking control of their money.
• 2:01
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• 2:03
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• 2:12
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• 2:20
  Welcome in, David.
• 2:21
  We were just reminiscing before.
• 2:23
  It's so great to have you back in as the retirement commissioner, you fancy person.
• 2:31
  I've been called fancy person for a long time.
• 2:34
  But carry on, keep it going.
• 2:36
  Just really keeping the level of professionalism here high.
• 2:39
  Yeah, because we met years ago.
• 2:41
  Yonks ago you were one of the very first, you were the very first person I ever interviewed for a podcast.
• 2:47
  Yes, that was way back when you were at Sorted.
• 2:50
  And now you are the person who is in charge of looking at our retirement savings as a country and saying here's the things we should and shouldn't do.
• 2:59
  I mean, what a fantastic turnaround.
• 3:02
  Welcome back.
• 3:04
  So you obviously very freshly in the role, what is it, a couple months?
• 3:07
  Yes.
• 3:08
  So the 18th of May is when, when I was appointed, I was so excited to get the role.
• 3:15
  It is a dream role for me because if you even talk to some of my colleagues and generally my friends, it's something that they relate to me as part of my kind of DNA.
• 3:26
  But being able to see how you can help people that may find the complications of managing money and finances while trying to get through the noise of life is really difficult.
• 3:37
  So I get to spend now all my time, every day, all day thinking about how we can improve New Zealanders financial wellbeing.
• 3:46
  And the Retirement commission is the most uniquely placed organization that can help deliver that and support government policy to improve that over the coming years.
• 3:59
  And that's really a big area that I want to focus on.
• 4:03
  This might reveal me as an absolute nerd.
• 4:05
  That probably doesn't surprise anyone but like how fun, how fun to get to do that.
• 4:09
  So okay, as you're getting your feet under the desk and you're sort of getting into the roll and you're looking around, is there anything that you look at just with fresh eyes and you think here's something we're doing
• 4:21
  well, here's maybe something we're not doing so well.
• 4:24
  I believe that we are doing a lot of things well.
• 4:27
  If you're thinking around in New Zealand terms, around savings and improvement, Kiwisave has been a big component of that.
• 4:34
  We'll be celebrating 20 years of that next year.
• 4:37
  20 years, that's so long.
• 4:39
  That means I got really old since it first started.
• 4:41
  But I remember when it was first talked about and it's working for those that it was intended for.
• 4:47
  And by that I mean those are on paye.
• 4:51
  They're getting paid a salary or wage.
• 4:54
  But we have some big headwinds at the moment as well.
• 4:57
  The cost of living, we say crisis, crikey.
• 5:00
  It's been going for over five years now and we have to really appreciate there are a lot of New Zealanders are doing it pretty tough at the moment.
• 5:08
  The conflicts, the areas that are going happening internationally, but also in New Zealand terms.
• 5:14
  People do genuinely need to think about how they can manage day to day rather than perhaps looking ahead.
• 5:21
  So we need to do better in perhaps getting more advice or accessible information and tools that will help New Zealanders kind of get into a better place.
• 5:31
  Kiwisaver is recognised by most political parties, in fact, all that it's important and I think how do we bring Kiwisaver, New Zealand super and workplace savings and other investments that we have collectively to provide us more certainty in
• 5:48
  future for the next generations coming forward.
• 5:51
  So the other things I'm pretty excited about, little daunting, but if we start joining the dots and be more holistic, we could really make a difference over the next three to six years.
• 6:02
  Well, I think actually your point there about being more holistic is one of the reasons why when I saw your name pop up, I was like, perfect.
• 6:10
  Because you have this really wide range, there's this deep financial background, but you were both in public sector educational roles.
• 6:18
  You've also been doing the private sector funds management thing as well.
• 6:23
  So I think that sort of wide ranging background is really helpful for the time we find ourselves in.
• 6:30
  Given that and the different conversations you must have had with people in those different roles.
• 6:35
  Is there an overarching thing that you think a lot of New Zealanders get wrong with their money?
• 6:41
  You know, I think as New Zealanders, probably the one area, if we're to underestimate the value of is understanding time and how that impacts your financial wellbeing.
• 6:52
  It's a broad term, but just bear with me because the elements that I think it connects to are really important.
• 6:58
  So you know me, I've been banging on about the eighth wonder of the world being the time, your time of compound interest and using those to actually build retirement savings.
• 7:12
  Then it's the time that we are probably underestimating our longevity in retirement.
• 7:19
  We look perhaps what our past generations and where they where their retirement span was and making time to make a plan for your own individual circumstances.
• 7:32
  I think that's one area that you can utilize that thematic that crosses both accumulating regular contributions and then the habit of then spending or decumulating.
• 7:47
  The key is that you have to change a habit almost of a lifetime.
• 7:52
  So there's a behavioral and a psychological change that you're just scared that maybe we might run out of money so you don't do more with it.
• 8:02
  So I'm kind of hoping to bring some of that to life as well.
• 8:05
  Yeah, it's interesting, isn't it?
• 8:07
  Because there's so much you touched on There, that would be fun to unpack.
• 8:12
  But I think as well, one of the things where you are asking people to think about the future and today is quite tough too.
• 8:22
  Is that quite a hard line to walk?
• 8:25
  I mean, how do you make that more relevant to people like, hey, you know, I know it's really tough paying your bills today, but you also need to think about something when you're 80, how do you make that
• 8:35
  pitch?
• 8:36
  It's such a good point.
• 8:37
  And you touched on my roles both at a public and private level and probably some of my peers will hate me for this, but I'm just being really honest.
• 8:46
  We are in the private or commercial world and working in funds management, investment management particularly, it's about building wealth and predominantly in the past it's about building wealth for wealthy people in a lot of cases because they're the
• 9:00
  ones that have been able to kind of save and build up that, I guess, that wealth for a big part of New Zealand population.
• 9:09
  We're in a situation where the cost of living, inflation is something that we probably five years or six years previously didn't really appreciate.
• 9:21
  We genuinely do now and we hear about it and the impact it's having on.
• 9:25
  There are groups in New Zealanders just staying ahead of the day to day costs of living, fully appreciate that and Kiwis have is a bit of a good barometer because we're seeing hardships that have tripled over the last
• 9:40
  five years and that's a very good indication that a lot of New Zealanders, particularly lower income, are being impacted.
• 9:47
  That's not going to change for a period of time, I suspect.
• 9:51
  Yeah, well, do you think the sort of financial environment and what it takes to get ahead with your money, do you think it's changed?
• 9:58
  I think the principles are exactly the same as they were when we were young and in our parents and their parents as well.
• 10:07
  The principles that I kind of grew up with is save a little, spend a little and where you can give a little so that you give back to community.
• 10:16
  It might not be financial, but it might be time, might be all those elements.
• 10:21
  So I think the foundations have not changed at all.
• 10:24
  But the way we get information and now we're getting into AI, we have providers that can unlock equity markets that only share brokers protected over years and decades and centuries before.
• 10:39
  So more choice and platforms that can give good information and support through that process.
• 10:45
  So a really good example, seeing financial capability incorporated into the school curriculum.
• 10:55
  How cool's that?
• 10:56
  I mean that's like the ambulance at the Top of the cliff for the next generations to follow that they can practically apply what we've been talking about for a long period of time.
• 11:07
  So I'm really positive about the opportunities, but I'm also very mindful of the current day challenges as well.
• 11:14
  Well, 100%.
• 11:15
  On that note then, is there something that we get right more often than not as New Zealanders that we maybe don't give ourselves enough credit for?
• 11:24
  As I've said, we're always really quick.
• 11:26
  Well, we need to save more, we need to have contribution rates go up and Kiwi saver, blah, blah.
• 11:31
  Actually, I think most New Zealanders have got good financial capability, skills and a good example of that would be.
• 11:42
  There will be.
• 11:42
  Most New Zealanders will have a really good idea of where their money's going currently because of the cost of living.
• 11:51
  So a budget.
• 11:52
  I'd be very confident that for a lot of family households, whoever's looking after or supporting that will know exactly where their money's going, what bills are coming up and what they need to do prepare for the challenge is
• 12:08
  when those unexpected expected events happen.
• 12:12
  Like one of the other things that we've been working hard on is to improve.
• 12:17
  How do you make it easy to build up an emergency savings account or a buffer account, for example?
• 12:22
  I mean, I bet we've spent over the years talking about why this is so important.
• 12:27
  It really is.
• 12:28
  We've got 62% of New Zealanders now having some form of emergency savings and that's been an increase.
• 12:35
  I think it was around 58% two years ago.
• 12:38
  So the trend's good.
• 12:40
  But how do we help others that just don't have the time, or they think it's important but they don't know how to start.
• 12:47
  So the launch of the buffer builder that we released is a really good example about taking what you and I talk about, the theory of why it's important to have an emergency savings account.
• 12:58
  But using open banking and software that brings you in control on your phone to either round up your transactions and sweep it away and you don't even know it's happening into your account.
• 13:13
  Paying yourself first, which is a really good first principle of any financial plan, or topping up when you might have some extra cash that you can just sneak away, all being done for you without having to go anywhere
• 13:26
  else.
• 13:27
  The ease and portability of that, I think is perhaps a transition.
• 13:31
  We'll start seeing a lot more.
• 13:33
  Well, exactly.
• 13:34
  I think I look at open banking coming into New Zealand finally, years after every other country.
• 13:39
  But can I say and let's not just start with open banking, let's broaden it to not just your mortgages and bank accounts, but also your KiwiSaver, your funds management, anything, your debt, so that you get a really good
• 13:58
  dash.
• 13:58
  This is what I'm really hoping that we can create a dashboard of sorts to take Sorted for example.
• 14:05
  A place where you can put that information and unlock the capability of our calculators and tools and make it real, personalize it.
• 14:15
  That's exciting to me.
• 14:16
  Yeah, I love that.
• 14:18
  And huge shout out actually to the Sorted tools.
• 14:20
  I think it's just sorted.org NZ tools.
• 14:23
  Yeah, look, you just go there, it's, it's pretty easy to navigate the spaces that you want to plan, whether it's working out your mortgage, whether it's KiwiSaver, whether it's, you know, getting started with a budget.
• 14:35
  Yeah.
• 14:35
  And anyone who subscribed to the newsletter will also know.
• 14:38
  I, I don't think I shout out very many things twice and I think the Sorted fund finder, I've shouted out like six or seven times and every time like it shows me people clicking through, everyone's clicking on that
• 14:52
  link being like, oh, I can compare my KiwiSaver fund.
• 14:54
  How great.
• 14:55
  So it's brilliant.
• 14:56
  The work that you guys do there is amazing.
• 14:58
  And I just look at the technological changes.
• 14:59
  I mean AI, I'm very much, I see that as a double edged sword in terms of there's good things, there's bad things, but the good things that you can do with AI to help people make managing their money
• 15:09
  a bit easier.
• 15:10
  I'm like, well let's grab those good things because we need those easy wins.
• 15:15
  Are there any other easy wins that you think people might need, could use that they might not be aware of?
• 15:21
  If I'm thinking, you know, going back to KiwiSaver because 20 years, it's a great foundation.
• 15:27
  You know the research we did recently on KiwiSaver that looked at, you know, those that are earning 50k which is about the average wage, you know, 90% of that group are making regular contributions into their KiwiSaver.
• 15:41
  So it's working well in that space where it's not working as well is the non pay or the self employed contractors.
• 15:52
  Hello, yes, yes please.
• 15:54
  I would like more KiwiSaver benefits back again please.
• 15:58
  So we know that they're contributing a lot less relative to those that are under or got their employer contributions.
• 16:06
  Their contributions, I mean there's a lot, probably more in the way it's been structured the incentives are for those that are on paye.
• 16:14
  But you know as well as I do a lot of New Zealanders were on PAYE and then they were put on contract or then they come in and out of self employment as well and even I've done that.
• 16:27
  But you also want to make sure you're making contributions.
• 16:31
  But kiwisaver may not necessarily be the right proposition particularly for those self employed sole traders.
• 16:40
  You know there are elements that are important for them to run their business but reminding them that perhaps their business isn't their future retirement plan either because in most cases they are the business.
• 16:51
  So getting some planning, getting some thinking around that.
• 16:55
  So the other area that we're really concerned about this is probably something that is a little controversial but you know just putting contribution rates up all the time does not support all New Zealanders to have a better financial
• 17:11
  outcome in retirement.
• 17:12
  It sounds a little counterintuitive.
• 17:14
  The group I'm talking about here are the lower income earners.
• 17:20
  Those that are genuinely, we have to be very careful that those contribution rates increases.
• 17:27
  If they're on the edge now, this could put them into some more difficulty which might mean that they will then need to use their Kiwi Saver for you know, a hardship.
• 17:39
  Or there is some research that was done recently by the New Zealand Societies of Actuaries that said, you know, there comes a time where actually the value proposition for lower income earners increasing it's not gonna make their retirement
• 17:53
  a lot better.
• 17:54
  The other area that I'm concerned about too is you know, for women who particularly are impacted for care, whether it's for your whnau for your children or for your older family members, you know, I'm a Gen Xer by
• 18:08
  six days.
• 18:08
  I'm going to carry that to my grave.
• 18:11
  There's the Burma generation and there's still that tail of that generation to come into retirement.
• 18:16
  The Gen X are understanding the support that they need to provide not only for their own children or family but but also their parents.
• 18:26
  And it's very difficult.
• 18:28
  And a lot of that weight responsibly falls on the female in the family or in a lot of cases, not all the cases.
• 18:37
  That means when you bring up a family you're out of work for a period of time.
• 18:43
  So catching up that income or that gap when you're not making contributions, we need to think a little bit more broadly how we can improve at that savings gap or retirement savings gap between men and women as well.
• 18:58
  And so Kiwi say the way it's developed and managed and works really well if you're employed with an employer that actually by the way is doing the right thing, paying it on top of your contribution rate, not as
• 19:12
  a total employment cost.
• 19:15
  That's one thing I'd really love to see to be consistent.
• 19:19
  But as providers we want to look at KiwiSaver as part of a total retirement income solution which includes NZ super, which includes workplace savings, which includes self employed contractors and those that aren't under pay.
• 19:36
  So I think there's a really good chance to get some improvement so we see a more holistic improvement in that space.
• 19:44
  You raised some really interesting points there in terms of who it's working for and who it isn't.
• 19:48
  And I know Kiwisavers are huge for people.
• 19:52
  Anytime I do an episode on KiwiSaver People are interested, people are playing it because for a long time it was the family home, right?
• 19:59
  Was the main asset, the main thing that made people feel wealthy.
• 20:04
  And then we brought in the KiwiSaver system.
• 20:07
  Love it.
• 20:07
  People took a while to get used to it and we're seeing those balances building up billions upon billions of dollars in there now, which love to see it and we're going to need that in the future.
• 20:19
  And yet it is, as you say, it's working really well for some people and then there's other areas where it's not working so well.
• 20:26
  And I just want to pull on some of the threads there that you mentioned, especially in terms of the self employed because I look at sort of the wider conversation that we have in terms of New Zealand and
• 20:35
  is our productivity good enough, is our economy good enough?
• 20:39
  You know, should we have more people investing in businesses rather than property?
• 20:43
  And then I'm like, well what do we do to support the small business community which is the backbone of.
• 20:49
  We are mostly small businesses.
• 20:51
  And I'm like, well it kind of sucks that they don't get much from our Kiwi Saver system.
• 20:56
  They don't get that employer contribution.
• 20:59
  They can get that, you know, that put in the thousand dollars, you get the 250, that's great, but it's small.
• 21:05
  And I, I sort of wonder are there things that you'd like to see be done there to support people?
• 21:11
  Because of course a lot of small business owners might think I'll sell my business when I retire, you know, that can work.
• 21:18
  And yet I was talking to someone who was unfortunately shutting down his shop on the weekend, having a closing down sale.
• 21:26
  So obviously I went to them and got me a bargain, but also talked to him and gave him commiseration.
• 21:31
  Yeah.
• 21:32
  And he'd been there 27 years, tried to sell it, couldn't sell it, just shutting down.
• 21:38
  Bummer.
• 21:39
  Huge bummer.
• 21:40
  And then that's his retirement also not looking so great.
• 21:43
  What do we do?
• 21:44
  Do we need to change KiwiSaver for people like that?
• 21:46
  I mean if you look at KiwiSaver, what 3.4 million people are in KiwiSaver.
• 21:52
  It's brilliant.
• 21:53
  You got 1.1 million or thereabouts that have made a contribution.
• 21:57
  That trend's only been growing.
• 21:59
  So it says that, you know, of course there are those that are, are retiring but we know a lot of New Zealanders are working full or part time even after 65, which is great because that means that not
• 22:14
  just financially but they're connected, they've got, there are a whole lot of really positive wellbeing elements that if people are able to contribute to working, you're putting off spending that nest egg another year or two years which could
• 22:31
  have a material difference for that money to be working harder for you.
• 22:35
  I think with Kiwisavers specifically, I keep going back to the point that there are some changes and opportunities that we could look to not tinker, but let's make sure that whatever changes are made gives certainty for the next
• 22:51
  generation.
• 22:52
  With a whole lot more tinkering and changing, you can almost break the confidence or Trust of KiwiSaver and for the work, for those that aren't PAYE, maybe KiwiSaver as it is today, if we can't find it more attractive
• 23:08
  for self employed or sole traders or contractors, maybe we do need to look at workplace savings more generally and what tools or support would be important for those people.
• 23:22
  Particularly when I think about small business, liquidity is a big issue, right?
• 23:28
  And having money and kiwisave, of course you can't get access to that, but maybe it's a way that how you pay yourself through payrolls using third parties and take away the hassle of setting something up where you could
• 23:45
  do it from your accounting system perhaps.
• 23:49
  And maybe there's some things to be thought through there as well.
• 23:53
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• 25:29
  All right, back to it.
• 25:32
  You've come into the role.
• 25:33
  You're pretty fresh in it.
• 25:34
  I'm sure you're still having a lot of conversations with the ministers of the day.
• 25:38
  There's an election coming up, who knows what will happen there.
• 25:41
  Don't want to say who you would be working with in the future, but whoever you're talking to in the future, are there things that are sort of on your radar to raise with them, however that conversation might go?
• 25:57
  When I came into the role, I did have some time to think about what would be what are the priorities of the Retirement commission going forward and retirement income policy.
• 26:07
  We've touched on that already.
• 26:08
  It's a core part of what we do, so that's a no brainer.
• 26:12
  And actually we're doing some work that after the election we'll be able to model different scenarios that includes not just NZ super but KiwiSaver and seeing how that might impact overall government spending in these areas, which I think
• 26:29
  we need to have that.
• 26:31
  The second part is obviously Kiwi Savour.
• 26:33
  It's part of that conversation.
• 26:35
  The third is Taking Sorted, which I think's a great brand and a great, I guess, support to New Zealanders to get started around anything around financial wellbeing and how do we take that investment and bring it to life
• 26:53
  in the next generations in a digital world, perhaps Decumulation is genuinely something that I think providers, kiwisaver providers, need to be supporting their members more for.
• 27:08
  There's no point getting to 65, and we've spent a lot of time telling people, your money's locked into 65, but then you get it and so they get a bucket of money, then what do they do with it?
• 27:20
  What's the most natural fear for everyone is, is that money going to last as long as I do?
• 27:28
  We've seen perhaps an example of Australia where they've got, you know, $4.5 trillion of savings and investment.
• 27:36
  They pretty much legislated their providers back in 2022 to provide a service which I think should be part of a kiwisaver provider's solution.
• 27:49
  So you're helping New Zealanders to build a retirement nest egg.
• 27:54
  We need to help New Zealanders to make sure that nest egg lives as long as they do.
• 27:59
  And where do you start?
• 28:00
  And perhaps the natural instinct is, well, gosh, this is my lot, I need to really protect it, so I'll put it in the bank.
• 28:08
  That's not going to be good, is it?
• 28:10
  Inflation's eating it away, you're not getting a return.
• 28:14
  And if you're living 20 years down the track, you should be thinking about how that money can work a bit harder for.
• 28:19
  And bear with me, this is a crazy analogy, but one that kind of resonates, I think, you know, everyone plans when, you know, if you're going to go on holiday, you're going to make a plan, right?
• 28:29
  You don't go to the airport or the railway station or the port and look at the departures and say, wonder, where are we going to go for our holiday for this?
• 28:37
  You know?
• 28:38
  Well, I don't think many people would do that, right?
• 28:40
  I would find that very stressful.
• 28:41
  I would not find that relaxing.
• 28:43
  I would find that terrifying.
• 28:45
  Because part of the plan of having a holiday is how long you're going to be on holiday for how much money you've got to allocate to spend on the things that you want to do.
• 28:55
  Are there stopovers?
• 28:57
  Do you want to travel a bit better or spend more time and money on experiences rather than the journey?
• 29:05
  All Those elements are 100% the same things that you think about when in retirement.
• 29:12
  And you shouldn't get to retirement age to think, now what am I going to do?
• 29:16
  And I think that's where we can help.
• 29:18
  I think this is where the private sector providers can do a lot more and help in that space.
• 29:25
  And many are starting to do that.
• 29:26
  Some will offer advice, some will offer some programs to help with it, but I think we can do better and I want the retirement commission to be a place where we can help support.
• 29:38
  Caught that.
• 29:38
  You've mentioned Super a couple of times as well.
• 29:40
  And that's a tricky one, right, because people might have their Kiwi Saver and they might also be receiving super for someone like me, of course, that's 25ish years away and time for that to change, which, you know, you
• 29:55
  try to make your plans and you're like, was that.
• 29:57
  What's the.
• 29:58
  What's the ground that I'll be on at that point?
• 30:00
  What do you think?
• 30:02
  Bearing in mind I know you don't have a crystal ball either, but how much do you factor in super when you're looking at how to help people with KiwiSaver?
• 30:11
  I'd never expected perhaps what Mum and Dad were enjoying or would be enjoying in nz.
• 30:17
  Super to be there when I got there, because that was a long, long, long, long time ago.
• 30:23
  Trust me, it's not that long before I get to that age.
• 30:27
  Four years, if we're counting.
• 30:30
  But for a lot of New Zealanders, that is the first foundation and a first pillar, if you like, of financial retirement preparedness.
• 30:39
  We do need to ensure that it's there for the next generations.
• 30:44
  But how and when it's going to be there and how it's going to be delivered in a sustainable way is going to be really incredibly important.
• 30:53
  There's a lot of discussion around its future affordability.
• 30:57
  What.
• 30:58
  What do we need to do to improve that?
• 31:00
  Well, that's some of the work that we're, we're wanting to contribute to and we're doing some of that work now.
• 31:05
  I've certainly had a lot of people from the sort of the private financial sector come on here and say you should plan your retirement, not expecting to have the pension, which is, I think, a scary thing to say.
• 31:19
  What do you think of that?
• 31:20
  Truly, some people say that many.
• 31:23
  What do you think of that?
• 31:24
  Well, I mean, that's fine if you've got.
• 31:27
  You've been employed and you're in a good job and you've worked really hard and you haven't been out of work at all for the whole of your working life.
• 31:36
  That's not reality, though, that NZ super is there.
• 31:40
  The premise was that it actually is based on having your own home.
• 31:45
  And that in itself is challenging.
• 31:47
  Right.
• 31:47
  Because we know home ownership rates have been falling.
• 31:51
  It's wrong to point out one thing rather than looking at the whole picture and holistically taking to account the majority or most New Zealanders circumstances and seeing where those that need a little bit more help get it and
• 32:07
  those that are on a really good trajectory, they also get supported or rewarded for the work that they do too around putting money away for their future.
• 32:17
  So it's a really tough balancing act which we've touched on and there's no simple silver bull or one answer that's gonna fit and be suitable for all people.
• 32:28
  Do you think it's reliable pension?
• 32:32
  I think at the moment it is.
• 32:35
  And I think in the future there will be times where we need to come up with a way that it will be in the future.
• 32:42
  What it will look like, I really don't know.
• 32:45
  And there are a lot of levers to pull in that space.
• 32:47
  So I think once again, just looking at NZ super by itself, just like looking at kiwisaver by itself is not necessarily going to get the best outcome.
• 32:57
  Yeah.
• 32:58
  Speaking of, you know, feeling like you can rely on things, you mentioned it before, you know, your, your previous person in the role, Jane, she was brilliant.
• 33:08
  Had her on the podcast as well and she said as she went, you know, be careful, don't mess about with KiwiSaver too much.
• 33:17
  People need to feel like they can rely on it, need to feel like they can trust what it's going to look like.
• 33:24
  And so when we have these conversations, and I love talking to you about, you know, ways we can improve it, I always like, Kiwisaver is so important to people.
• 33:31
  Let's make it amazing.
• 33:33
  And then I balance that with yes, but people need to feel like they can rely on it.
• 33:37
  They need to feel like they know what shape it's gonna be.
• 33:40
  How do you balance that giving people that certainty?
• 33:44
  It's a big question, isn't it?
• 33:46
  I guess if we've seen over the last 19 years the changes that have been made to KiwiSaver and a lot of cases haven't been necessarily as positive for Kiwisaver members when they first joined.
• 33:59
  The key part is not tinkering, just little bits that we've been kind of doing on the sides and actually again, putting it into context if we're serious about giving certainty and trust for the next generations to come and
• 34:15
  having KiwiSaver as one of those key foundations for building a great way to build up savings for your retirement.
• 34:23
  And it is the foundations are really good, you know, relative to a lot of other countries around the world.
• 34:31
  The auto enrollment, the truck and trailer approach, basically Wherever you go, your KiwiSaver will follow you.
• 34:38
  It's just awesome.
• 34:39
  Having Inland Revenue being the collection point of contributions mitigates a lot of the transactional costs.
• 34:46
  I mean there's just the building blocks are there.
• 34:49
  We just need to make sure we get the balance of employer employee contributions, the affordability of that.
• 34:58
  Are there any other ways that we could encourage New Zealanders to use it?
• 35:02
  But then what about those that aren't via paye?
• 35:05
  What about those that are out of the workforce for a period of time?
• 35:09
  There's not one answer.
• 35:11
  So we just need to get better data, better information.
• 35:14
  We've got a lot of research to support these things and we're doing some work in that non PAYE space at the moment.
• 35:20
  Ready again for the newly elected government to have that information to bring to the table and then get a whole lot of experts views that don't necessarily always agree.
• 35:33
  But ultimately we find a good solution that gives the trust and consistency for Those that see KiwiSaver as a really important component to their retirement outcome.
• 35:47
  Yeah, yeah.
• 35:48
  Where do you see it as?
• 35:49
  Cause, you know, you've mentioned a few times in this chat about having it as.
• 35:52
  As one of the planks, you know, not the only thing.
• 35:55
  And I think that's a really good point because again, love Kiwisaver, huge fan, but it is locked into you, either first home or 65.
• 36:05
  We talk about things like early retirement, financial independence on this podcast too.
• 36:09
  If you want to retire at 50, well, you're not going to be using your KiwiSaver for that, are you?
• 36:13
  Or starting a business, you know, something like that.
• 36:16
  So where, what sort of other things do you think people should be thinking about?
• 36:20
  How much should you be relying on things like super or schemes like KiwiSaver versus building something for yourself?
• 36:29
  I know that none of us live in an ideal world, but if you take an ideal New Zealander.
• 36:34
  Yeah.
• 36:35
  And say what should be in the mix for them in an ideal situation, how would you like that to look?
• 36:41
  Yeah, ideally it would be great that everyone was employed, everyone got employer contributions in their Kiwisaver.
• 36:48
  They were able to afford the contribution rates that were going in and let time compound and interest and all those assets that we invest in both domestically and internationally over 30, 40 year period, you're going to end up
• 37:05
  in a pretty good place.
• 37:07
  But life's not like that, unfortunately.
• 37:09
  So if New Zealanders are going in and out of different types of ways of employment, liquidity is really important for those that are self employed for Example but that doesn't mean that they can't invest.
• 37:24
  It might mean though that they can access if they really have to.
• 37:28
  So their main priority of running the business is being managed.
• 37:32
  So cash flow is really important right, based on NZ Super KiwiSaver and then additional savings or investments outside KiwiSaver is important because the other thing that we think about is a bigger buffer if for example you become unemployed
• 37:50
  for a period of time a lot of New Zealanders are taking their future savings or income through KiwiSaver and hardships and that's, you know, you're kind of robbing your future self but you need it because you don't have
• 38:04
  the income perhaps to cover the bills or your property mortgage commitments, whatever.
• 38:10
  So I think using those three pots, so you got maintain the NZ super pillar then you've got Kiwisaver.
• 38:18
  But Kiwisaver is not the only investment solution and there are a lot of options out there that gives you more flexibility and if you need it it's not locked in as well.
• 38:29
  So saving, you know, just saving enough out of kiwisave and this is where the contribution rates across the ditch they were saving about 12%.
• 38:39
  Now that six plus six seems to be the right answer perhaps but we know for a lower income earners that it's going to be really hard for them to maintain.
• 38:49
  So if you can do more with your budget, you're seeing where you might have a bit of excess then maybe slip a little bit more regularly away into other options, investment options.
• 39:00
  Is there one thing that you've done in your money life that has made the biggest move, the dial for you that you think could help more people and this could be savings, investments, career, anything.
• 39:13
  But it does come back to your money.
• 39:15
  Probably the thing I learned the most and I kind of learned it from when I was saving my 20 cents that mum would give me to put in my post office savings bank, you know, on a weekly basis
• 39:27
  is that regularity of contribution is probably the one thing that will make a material difference.
• 39:37
  Performance of funds, fees, all those other elements that we bring into conversation around why this Kiwisaver is better than the other KiwiSaver provider.
• 39:48
  It doesn't matter if you're not making contributions.
• 39:52
  The success of KiwiSaver and long term savings is regularly contributing to so that you are getting into the habit but also it's building that compound impact and that I think is probably the one thing that I've reflected on
• 40:09
  over all my years around how I got ahead was Always putting something away every fortnight or payday, irrespective of perhaps circumstances.
• 40:20
  And that would vary sometimes as well.
• 40:23
  I think I've seen some and I wish I had it to hand, but I just have to talk about it obliquely.
• 40:27
  But I have seen some research around that just being in the game and just doing it regularly, weekly, fortnightly, monthly has more of an impact than getting the sort of the perfect fund, perfect outcome, perfect fee structure, whatever,
• 40:44
  all of that stuff, sure, great.
• 40:47
  But just doing it and doing it regularly is the biggest thing that moves the needle for people.
• 40:52
  Yeah, totally.
• 40:52
  I mean, you know, if you look at the, the degrees of things that contribute to your overall return, if you like using kiwisaver example.
• 41:02
  But managed funds or investment, any, any type of investment is that one putting money in regularly that helps smooth out a little bit of the market volatility.
• 41:12
  Cause you're buying, you know, managed funds, you're buying more units when it's cheaper and less when it's more expensive.
• 41:19
  But ultimately you've got a smoothing out effect.
• 41:21
  So that's the first thing.
• 41:23
  The second element is where those funds are invested.
• 41:27
  So in technical terms the asset allocation sounds boring, but it's really, are you putting money into growth investments like shares and property, or are you putting money into cash and fixed interest, which is lower volatility?
• 41:41
  So the higher waiting and the higher length of time you've got has a massive impact on, on your outcome.
• 41:47
  Then the third thing is really what can the provider or the fund manager or the platform that you're using can add value, whether it's with some advice or fees obviously have an impact as well.
• 42:02
  The other three kind of components that you can determine all of those, but sometimes we've seen it's quite hard to move from, if you're quite, quite conservative to go into a little bit more of that growth stuff.
• 42:17
  But I think New Zealanders have transitioned really well over the last probably five to 10 years where there's been a transition to growth assets because they know time is on their side if they're in that position and that's
• 42:31
  working well for them.
• 42:33
  It's not to say.
• 42:35
  And it feels like there's always a market correction at some stage.
• 42:41
  I'm going to stage I don't want too many more before I get to retire.
• 42:44
  So you need to have a plan to kind of how do you take some of that risk off the table when you're getting closer to retirement?
• 42:51
  Because the impact the last few years in working life, in the first few years when you are retired, if there's some market, quite severe market volatility that will have quite a long term impact on your savings as well.
• 43:08
  That's why planning ahead's so important.
• 43:10
  All right, so people being very time poor and often only half listening, much as we love them all, if people only took one thing from this chat, something usable that they could put into action with their money, whether
• 43:23
  it's you're doing good on this, do it more or you're not doing great on this, stop it, or something else entirely, what do you hope that one thing would be?
• 43:31
  I've been toying up whether to use this example, I've never made a lot of impulse buying and impulse buying at the moment.
• 43:41
  If people can mitigate that risk of seeing something that looks cheap and it's on special, just take a moment to see whether it's something that you really need given perhaps where your financial circumstances are.
• 43:56
  I'll give you a real example.
• 43:57
  Using me.
• 43:58
  You know me, I love music, right?
• 44:01
  And I wanted to get a turntable into the commission because I thought it'd be quite cool if you ever saw suits.
• 44:09
  And it just happened one day when I was scrolling through my emails and there was an offer to get a crowded house once in a only one of 100 signed and autographed by them.
• 44:24
  And it was I think $299.
• 44:28
  I thought, wow, that's such a bargain.
• 44:30
  And I really, you know, and it's in a little suitcase and it'd be really cool and it'd be quite funky.
• 44:35
  So I went and bought it.
• 44:37
  What I didn't realize it was actually in US dollars and so was the packaging in US dollars.
• 44:43
  So what was a bargain turned out to be actually quite a lot of humor for a lot of other people that I've shared the story with already.
• 44:51
  So I'm quite willing to highlight some, some of the things that I'd say to people you should do well, then I've got to make sure that I don't do it as well.
• 44:59
  But we all get caught up sometimes, don't we?
• 45:01
  And we don't read the fine print or we don't see the cost, the real cost of when we buy some stuff that maybe we don't necessarily need.
• 45:10
  Love that.
• 45:11
  All right, so guard your now spending.
• 45:14
  Maybe put some of it towards your future savings.
• 45:16
  I think so.
• 45:18
  I think that and having tools that can show you the benefit of if you didn't spend that today and was able to use it in 20 years time, what would that be?
• 45:26
  Worth.
• 45:27
  I love that.
• 45:28
  Thank you so much for coming in.
• 45:29
  David Boyle, retirement Commissioner these days.
• 45:31
  Can't wait to see what you do and how it all shakes out in the coming months.
• 45:35
  What comes out?
• 45:37
  Thank you very much for coming.
• 45:38
  Thanks, Frances.
• 45:38
  It's been great being on your show.
• 45:40
  Look forward to catching up again.
• 45:41
  Absolutely.
• 45:43
  Now, if this episode was helpful to you, send it to a friend.
• 45:45
  We can all level up with our money together.
• 45:47
  Until next time.
• 45:47
  Time.
• 45:48
  Have a great day.
• 45:50
  This podcast can only give you general information about how things work in most situations.
• 45:55
  It's not individual financial advice.
• 45:58
  If you're after that.
• 45:59
  A financial advisor is always the best bet.