The Missing 2016 Review
Press release – overall
The Missing 2016 Review – building trust for life beyond work
Michael Chamberlain – an Auckland-based actuary, investment adviser and co-founder of SuperLife (now owned by NZX).
Michael Littlewood – now retired
but an active participant in public policy issues associated
with saving and superannuation; a co-founder of the
University of Auckland’s Retirement Policy and Research
Centre and also of
24 July 2017
Michael Chamberlain and Michael Littlewood have launched what they say is the review of retirement income policies that New Zealand should have received from the Retirement Commissioner in December 2016.
Their report is called The Missing 2016 Review – building trust for life beyond work and is available online at www.alt-Review.com.
“We were very disappointed with the Retirement Commissioner’s 2016 review of retirement income policies. The findings were cloaked in a jokey, cartoon-like presentation on the web site of the Commission for Financial Capability and amounted to 34 recommendations and observations with little to no supporting evidence for nearly all of them.”
The authors label the Retirement Commissioner’s 2016 report an “evidence-free zone”.
Chamberlain and Littlewood’s report has 22 sections covering the key parts of New Zealand’s overall retirement income framework. To put the report into context, the first section lists the authors’ nine top priorities, none of which received any attention in the Retirement Commissioner’s 2016 Review.
Each of the other 21 sections describes one particular issue and ends with a series of questions that New Zealanders need to discuss before we can settle public policy on that issue.
Chamberlain and Littlewood use the Retirement Commissioner’s comments on KiwiSaver as an example. Of the 34 recommendations or observations in the report as a whole, 15 were about KiwiSaver. The underlying message seemed to be that the KiwiSaver regime needed ‘strengthening’ (more restrictions, fewer options, higher contributions etc.). However, Chamberlain and Littlewood say there was no supporting evidence to even justify the continued existence of KiwiSaver. Is KiwiSaver working? The 2016 Review didn’t ask that question. Does New Zealand need KiwiSaver? If not, suggestions to ‘strengthen’ KiwiSaver are a policy cul-de-sac, they argue.
The authors are similarly direct about the government’s recent changes to New Zealand Superannuation – an increase in the state pension age from 65 to 67 and in the qualifying number of years of residence from 10 to 20 – both changes becoming fully effective by 2040.
Chamberlain and Littlewood say that the government’s decisions were not founded on a proper, evidence-led, policy-making process. It chose just two of 13 possible changes that could have been made to NZS with little to no justification for ignoring different possible reforms or even modelling the impact of the two reforms it chose. A section of the The Missing 2016 Review suggests what should have happened.
The authors say that their report’s overarching theme is about what governments can and cannot do:
- There is a range of things that only the government can do – it should do those things.
- There is another range of things that, based on the evidence, the government seems unable to do - it should stop doing those.
- Finally, there are things that the government is doing but, based on the evidence, seem not to be effective – it should also stop doing those.
“This is evidence-based policy-making - if it works, based on the evidence, then do it; if it doesn’t work, stop doing it. If we do not know whether it works, gather the evidence before deciding what to do. For New Zealand, this approach to policy–making on retirement incomes would constitute a change but it’s time New Zealand tried it. Before that process can even start, there is a lot of data to gather.”
The authors say that the Retirement Commissioner’s 2016 Review was a wasted opportunity, one that will probably be captured by the politicians in this election year.
“We have decided to fill in some of the gaps because we worry that, in an election year, those gaps will be exploited by politicians wanting to attract attention to their parties’ agendas – saying what it takes to get elected. We think the government’s announcements on 6 March 2017 have us heading into once-familiar territory – the politicisation of retirement incomes.
“New Zealand’s political history shows that retirement income policies are particularly unsuited to political campaigns. We do not want New Zealand to re-learn that lesson.”