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How Kiwisaver in increasing inequality

Media StatemenFor Immediate Release 17th July 2017

How Kiwisaver in increasing inequality

As KiwiSaver turns 10, it's clear the much-lauded retirement saving scheme is entrenching inequality for future generations of retirees, Peter Malcolm, spokesperson for the income equality project Closing the Gap, said today.

Cuts to the scheme over the years, plus the rising cost of living and low wages, have made it virtually impossible for people on lower incomes to contribute, Mr. Malcolm said. "This is a gap that will follow all of us into our retirements, exacerbating inequality for years to come."

More than 40 percent of KiwiSaver's 2.7 million members aren't making any contributions, and as reported in The New Zealand Herald, there's a constant stream of withdrawals for hardship reasons. KiwiSaver expert and columnist Mary Holm has said explicitly that in terms of wealth distribution, KiwiSaver has "arguably increased the disparity between the poor and the rich".

Mr. Malcolm said feeding that inequality were current abatement levels — how much benefits and tax credits are cut as paid work increases — which can be a huge hurdle to people on low incomes.

"We've heard from single parents on benefits who find the cost of things like transportation to a job and child care mean they'd be better off not moving into the paid workforce," he said. "As for contributing to KiwiSaver, that's simply unreachable."

KiwiSaver is a good idea that will only work if it's part of a set of tax policies that ensure all New Zealanders can contribute and benefit from it, not just middle and upper income earners, he said.

ends

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