Latest / Early Edition with Ryan Bridge / Shamubeel Eaqub: Simplicity Chief Economist on Kiwisaver changes in Budget 2025

Transcript

Shamubeel Eaqub: Simplicity Chief Economist on Kiwisaver changes in Budget 2025 · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: We've got changes to keep saver as promised. The default
• 0:03
  Speaker 1: key we Saver contribution will increase from three to four percent.
• 0:06
  Speaker 1: That falls on you, the worker or the employer, and
• 0:09
  Speaker 1: the government has its contribution to a maximum of two
• 0:12
  Speaker 1: sixty a year. The savings for the government two and
• 0:15
  Speaker 1: a half billion dollars over four years. Shama Bill Jacob
• 0:18
  Speaker 1: is economist at Simplicity with Me this morning, show me,
• 0:20
  Speaker 1: Good morning, Good morning. So, if you're for a young
• 0:24
  Speaker 1: person who's saving for their retirement, the net result of
• 0:27
  Speaker 1: all these changes are you better off or worse off
• 0:31
  Speaker 1: by the time you get there.
• 0:33
  Speaker 2: You will be better off because you will have more
• 0:35
  Speaker 2: money in retirement, but you will have less money in
• 0:38
  Speaker 2: your back pocket on the way through.
• 0:40
  Speaker 1: So does that mean over my lifetime am I better
• 0:44
  Speaker 1: or worse off? Presumably better off because if I'd spent
• 0:47
  Speaker 1: the money rather than saved it, I wouldn't get compounding returns.
• 0:51
  Speaker 2: This is it. So the way it works is for
• 0:54
  Speaker 2: the average person, your q server contributions will increasp about
• 0:58
  Speaker 2: a thousand dollars a year, Your take compey will fall
• 1:02
  Speaker 2: by but seven hundred fifty dollars a year, and the
• 1:04
  Speaker 2: government's revenue will increase, but five hundred dollars a year.
• 1:08
  Speaker 1: So anyone will lose. Anyone who will be paying in
• 1:11
  Speaker 1: the extra percent will lose seven hundred and fifty dollars
• 1:13
  Speaker 1: a year on.
• 1:14
  Speaker 2: Average, the average person who's on earning seventy five thousand dollars.
• 1:18
  Speaker 2: That's the typical wedge for a QII.
• 1:20
  Speaker 1: Okay, and how's that going to go down? Do you reckon?
• 1:24
  Speaker 2: Well? I think that's the main worry about this thing.
• 1:26
  Speaker 2: So I actually like the fact that we're going to
• 1:28
  Speaker 2: increase contributions because we actually to increase even more over time.
• 1:32
  Speaker 2: Australia is going to twelve and a half percent. But
• 1:34
  Speaker 2: for people who are in mid middle or low income
• 1:37
  Speaker 2: that reduction in take compei might be a bit of
• 1:40
  Speaker 2: a concern, especially given the current living cost of living
• 1:43
  Speaker 2: crisis and people are still struggling. Right.
• 1:46
  Speaker 1: The government's sweetener for Kiwi savor that's obviously getting the
• 1:49
  Speaker 1: chop are halved, but also means tested. This is a
• 1:53
  Speaker 1: retirement savings scheme, and where means testing the government contribution
• 1:58
  Speaker 1: a little ironic, we're not mean testing. That's soper too.
• 2:02
  Speaker 2: Well, that was my thought. You know, it feels right
• 2:05
  Speaker 2: that we are means testing because you know, for people
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  Speaker 2: like me who are earning good money, we're doing enough
• 2:09
  Speaker 2: to save our retirement. But it seems ironic that we
• 2:13
  Speaker 2: are very clear about means testing. This particular subsidy which
• 2:17
  Speaker 2: only doesn't you know, only cost about a billion dollars
• 2:20
  Speaker 2: this year, right, but super is going to cost us
• 2:24
  Speaker 2: twenty five billion dollars and it's increasing by one and
• 2:26
  Speaker 2: a half billion dollars a year. So there's this kind
• 2:28
  Speaker 2: of weird kind of political incoherence that's taking place. But
• 2:31
  Speaker 2: it's not surprising. We've been doing this for decades.
• 2:33
  Speaker 1: Right, Yeah, it's and once Winston's gone, it'll all be sorted,
• 2:37
  Speaker 1: I'm sure. Shammi, thank you. Shamobo Jacob a Simplicity chief economist,
• 2:42
  Speaker 1: with me this morning.
• 2:44
  Speaker 2: For more from Early Edition with Ryan Bridge.
• 2:46
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• 2:50
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