Hon Dr Michael Cullen
Minister of Finance
Hon Peter Dunne
Minister of Revenue

9 August 2007 Media Statement

Early signs positive for KiwiSaver

Early take-up rates for the landmark, work-based saving scheme, KiwiSaver, are very encouraging, Finance Minister Michael Cullen and Revenue Minister Peter Dunne said today.

As of yesterday – just five weeks after the KiwiSaver launch – the total number of enrolments received by Inland Revenue had reached nearly 92,000, with just over 3,000 opt-out forms received to date.

“These are early, but very encouraging signs for a scheme which aims to make it much easier for many New Zealanders to build a nest egg for retirement,” the Ministers said.

“The initial numbers compare very favourably with Treasury forecasts of take-up,” said Dr Cullen. “The mid-point estimate was that around 50 per cent of the workforce would be active members of KiwiSaver after 10 years.

“Treasury forecasts that 345,000 people would have enrolled in KiwiSaver by the end of the first year. That’s just under 30,000 a month. This data suggests that take-up to date is well ahead of that number. Active choice enrolments alone – these are the people who have actively decided to opt into KiwiSaver, rather than being enrolled automatically – are already at the level Treasury had forecast for total enrolments.”

Mr Dunne emphasised that these numbers were provisional. “They include numbers of employees who are automatically enrolled in KiwiSaver who have eight weeks to opt out, so that will reduce the total.

“It is important to remember that the automatic enrolment provision will be key to helping KiwiSaver enrolments grow strongly over time as it deals with the inertia people face when making decisions to put away savings for retirement. Some 700,000 people change jobs every year.

“KiwiSaver has received a great deal of media coverage in the last few months, which has no doubt boosted interest.

“However, this level of activity may not be sustained in the coming months, though we would expect another surge of activity next April when employer contributions come into force. (Employers will be required to contribute 1 per cent of an employee’s gross salary rising to 4 per cent by 2011. This will be partly offset by an employer tax credit).”

“It’s important to bear in mind, too, that we’ve always said that people should take their time over the decision to join, because it is an important decision that should not be rushed,” the Ministers said.

“This is a promising start,” said Dr Cullen. “KiwiSaver has clearly struck a chord with thousands of New Zealanders who understand how the scheme can make a real difference to their long term financial security.”

Note:
The 92,000 enrolment figure can be broken down as:

- 33,000 people who have actively chosen a provider and gone directly to a scheme to enrol,

- 47,000 people who have actively chosen a provider and enrolled via their employer,

- 12,000 people who have not made a decision and who have been automatically enrolled in either a default scheme or their employer’s preferred scheme.

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