AMP CEO says super recipe won’t work
AMP CEO says super recipe won’t work without all ingredients
Globally, countries such as the United Kingdom, Australia and Germany are all preparing for the retirement of the baby boom generation with integrated packages of incentives, workplace savings, education and government provision, says Paul Batchelor, CEO of AMP Limited.
Mr Batchelor is visiting AMP’s New Zealand operations this week with the Board of AMP Limited.
“These countries offer ideas about how New Zealand could tackle the retirement savings dilemma.
“I’ve been watching with interest the debate in New Zealand, and commend the Government for their positive action this year. I also welcome Dr Cullen’s remarks today regarding the need for a clear message that private savings are essential. It is indeed vital that those savings are available for investment and growth rather than locked up in real estate.
“However, I firmly believe that a retirement solution without workplace savings misses a key element of a successful retirement savings policy.
“In 1986, Australia for example, made a commitment to address a similar issue. There is now widespread agreement between political parties, employers, unions, financial services companies and individuals. And, there has been a massive shift in savings attitude and increased accountability in retirement savings by Australians.
“There are common issues between all these countries and New Zealand. Australia is one country that chose to adopt a three-tier system, which focuses on three pillars – government (one), workplace saving (two) and private saving (three).
“The pillars have been key to Australia’s saving success and spread responsibility between employers, individuals and Government.
“Australians have taken to the system, and a major factor has been the agreement between political parties on key elements, ensuring stability of the core system.
“Superannuation coverage for all Australian workers including self-employed is now around 85%.
“New Zealand’s Super Fund is a great starting point, but there is a risk that individuals and employers feel absolved of the need to take action, because the Government is perceived to be taking responsibility.
“There’s never been a better time to save. Government tax changes have created a modest incentive for those earning over $60,000 and I understand consideration is being given to extend this to those on lower incomes. There is now a fantastic range of investment products and services available in New Zealand, including AMP’s recently launched InvestorNet, which has accumulated $25million of funds in its first two months.
“Over 90% of Australian employees now save for their retirement through their employers, while here in New Zealand research shows that only 17% of employees are supported by their employers to save for retirement. Yet, research in New Zealand shows that workplace super schemes are amongst the most popular remuneration benefits for employees.
“New Zealanders will decide what is right for New Zealand, however it could be useful to draw on the experience Australia and other markets have already gained over the years,” says Mr Batchelor.
AMP is the leading provider of superannuation in Australia and New Zealand.