Financial Confidence And Capacity Essential to Wellbeing
Wellbeing must include financial wellbeing says Financial Advice New Zealand following the release of the 2019 Budget.
“There is a clear link between wellbeing and financial confidence and capacity,” says Katrina Shanks, CEO of Financial Advice New Zealand. “To help New Zealanders build a successful future, access to quality advice and confident use of tools such as KiwiSaver, is essential.”
“Sixty-eight percent of New Zealanders have money worries and 44% could access only one month or less of income from savings or other means*. That’s two of the many very concerning statistics that access to quality financial advice can greatly aid in improving,” says Shanks.
“KiwiSaver advice for young New Zealanders starting work is a prime example: we want to see more young Kiwis able to access quality advice on this essential savings tool at the beginning of their working life; to help give them confidence and capacity to build financial wellbeing.”
“We are making a set of recommendations regarding KiwiSaver to the Commerce Minister: The Financial Advice New Zealand Keeping KiwiSaver Simple Initiative includes three key policy recommendations: (1) Access to Advice on a KiwiSaver Scheme, (2) Levels of Contribution Rates, and (3) AML requirements for non-employees.”
Access to Advice on a KiwiSaver Scheme
Twenty percent of KiwiSaver members are on a default scheme, primarily because they are unaware of the options and which scheme is right for their needs and goals.
“We believe the Government should provide assistance for existing and new KiwiSaver participants to access financial advice through the workplace or through an approved financial adviser register. This will give more Kiwis the ability to assess the schemes and what is best for their needs,” says Shanks.
Levels of Contribution Rates
To best align KiwiSaver with the personal financial goals and needs of the individual, members should be able to choose their own levels of contribution.
“Currently the minimum contribution of 3% is prohibitive for Kiwis on low incomes; and the maximum of 10% is limiting for those who may want to fast track their savings.”
“We recommend that there be no set contribution rate except for a minimum of 3% for members, as well as the introduction of a 1% contribution for low income earners and beneficiaries.”
AML requirements for non-employees
Currently those who are self-employed or under 18 years old have higher regulatory requirements to become a KiwiSaver participant.
“Common sense indicates that the level of risk of money laundering and terrorism activity through a KiwiSaver plan is low, and as such the AML requirements for this group of Kiwis is an unnecessary barrier to participation. We recommend that all KiwiSaver participants be excluded from AML requirements,” says Shanks.