KiwiSaver the bedrock for Kiwis to have the good life
2 July 2013
KiwiSaver the bedrock for Kiwis to have the good life – and a good retirement - with a few enhancements
The Financial Services Council (FSC), lobbying for an affordable, fair and attractive retirement income policy, says KiwiSaver is the key to a comfortable life after 65.
FSC, whose 21 members are managing more than $80 billion in savings and providing financial services to more than 2 million New Zealanders, says retirement savings is an urgent issue the country must recognise and address and is taking its arguments out to the community and the Beehive.
The Council has this week appointed one of the country’s leading communications managers, Susan Robinson-Derus, to further boost its efforts to have millions of New Zealanders engage in what has been described as “the most important conversation of our time”.
Ms Robinson-Derus, of Auckland, has had a successful career in journalism, corporate and consulting to multiple global organisations over the past 25 years. She has recently undertaken strategic communications work for Fonterra.
Ms Robinson-Derus would be working on ways in which to inform and engage people nationwide in the discussion on future options for retirement incomes.
The Council will also host a major forum in October involving overseas experts and New Zealand decision makers, to focus on how to more than double retirement incomes – while continuing to give people the choice to retire at age 65.
“KiwiSaver has been well supported in its first six years but we have to move now to make the scheme work harder for people so that they can have the house, the education, a lifestyle with choices and a comfortable retirement,” says FSC Chief Executive Peter Neilson.
“Recent life expectancy forecasts indicate that by 2055 New Zealand will have 1.7 million people aged 65 or older with an expected life span of 95. Superannuation, current rates of contributions for retirement under KiwiSaver and taxation cannot stretch that far so we must act now to change our financial behaviour and create the policies, including a more attractive taxation regime for long term savings, that make it easy for people to save today so they have surety for tomorrow.
“Something will have to give if we are to avoid large tax rises to pay New Zealand Super from age 65,” Mr Neilson says. “We have to look at the measures we need so people can keep retiring at age 65, and use KiwiSaver to fund the gap until New Zealand Super cuts in at a later age. If KiwiSaver became universal for all employees, this would see the pressure to pay future pensions eased, while for 18 to 40 year-olds on the median wage their retirement incomes would more than double to $48,000 a year.
“Scrapping a compulsory retirement savings scheme in 1975 is now one of the Zealanders’ greatest regrets. We need a fully informed national discussion on how we manage retirement incomes in future. KiwiSaver now involves more than 2 million employees and our research continually funds around 60% support among adults nationwide to make it compulsory.”
The FSC is undertaking further research on policy options which would make greater KiwiSaver coverage and higher contributions acceptable and affordable to those who have concerns. The proposal will be presented at the October Future of Super Conference followed by discussions with politicians to help strike a national consensus for a new multi-party agreement and provide secure policy for the future, Mr Neilson says.