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Philip Macalister
Philip Macalister
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Taking a long view on KiwiSaver changes

Friday 10th of October 2008
At the risk of getting another earful from some readers I am going to venture into politics again! Before I start though a few reasons why. This site is about personal finance and financial advice. This is an area of intense interest this election, particularly in the wake of the National Party’s economic package released this week. It is quite reasonable, and I would suggest responsible, to discuss what each of the political parties are offering investors and advisers in the run up to November's election. (For the record I don't belong to, nor am I affiliated with any political party). John Key firmly put KiwiSaver on the agenda this week. This is an issue worth discussing. I don't have a hard and fast view on National's tax cut plans at the moment, but it seems to me raiding KiwiSaver to provide personal tax cuts isn't the smartest idea in the world. Clearly KiwiSaver has been popular with New Zealanders. Can you tell me another product in this country which has amassed more that 800,000 customers in less than a year? To take away some of the appeal of the scheme so everyone can get a little bit extra cash in their pocket doesn't, on the face of it, seem to add up. (Happy to hear contrary views on this). Also I wonder whether encouraging more consumption, and no doubt more debt, is a great idea when financial markets are falling down around the world due to credit issues. Likewise encouraging savings over consumption is at the heart of what a lot of this industry is about. Therefore it has been fascinating to watch the string of press releases on National’s plans and KiwiSaver and observing some strongly divided views. Even among industry bodies there seems to be contrary opinions. The ISI is disappointed with what is being proposed while ASFONZ is supportive. Unions, understandably are lining up with Labour on this, although National is proposing to lower the contribution rate to 2% (something the unions argued strongly for), and business groups tend to say the ideas are on the right track. Also this industry is based around long-term thinking. While much of the media comment is about the short-term immediate impact of the proposals, there was a piece of news I caught last night which took a long term view. I’m seeking the numbers now, but from memory the difference in how much a KiwiSaver would have in their account at age 65 under National and Labour was around $200,000.
Comments (3)
Kevin Kevin
"Clearly KiwiSaver has been popular with New Zealanders. Can you tell me another product in this country which has amassed more that 800,000 customers in less than a year?" Sure, right after you tell me another product that is compulsory to start using, that you must opt out of if you don't want to use, and which gives you a cash back refund of 200% of the products original price. I am pretty sure it isn't popular because of the expected impact on people's wealth decades down the track in retirement :)
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16 years ago
Austin Fisher
While I am no apologist for National I think that they are getting a bad press re their proposed KiwiSaver changes. For the member, the Government subsidy is not changing at all. It is the required employer subsidy from 2010 that is reducing. Talk of National "raiding" or "axing" KiwiSaver is a bit emotive in my view and unsettles present and future KiwiSavers alike. Let's face it - from a provider's point of view, if the 2&2 model was all we ever knew, we would have taken it. It's KiwiSaver Lite, not KiwiSaver Shite.
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16 years ago
alan clarke
Who actually cares about KiwiSaver at the moment? It's time the politicians stopped electioneering and ran emergency meetings to manage the economy. If necessary manage the economy 5 days per week and electioneer at weekends. Till they do this none of them have any credibility.
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16 years ago
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Latest Comments
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1 month ago Andy Phillipson
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2 months ago Valkyrie Vulcan