The future of KiwiSaver
Act party leader Don Brash says KiwiSaver hasn't helped New Zealand's savings rate and was nothing more than a bribe from the previous Labour government.
Tuesday, August 30th 2011, 7:10AM 
8 Comments
He told the Workplace Savings conference last week that governments don't know how to increase national savings.
"Let me make it quite clear that KiwiSaver is a wonderful scheme for savers – the subsidies from the government are so generous that if you’re a New Zealand resident under the age of 65 and don’t belong to a KiwiSaver scheme you don’t understand it," Brash said.
"But does KiwiSaver increase national saving? Almost certainly not."The only study I’ve seen suggests that KiwiSaver has probably increased private sector saving to a very modest extent – most of the private contributions coming not from reduced spending but from a diversion of saving from other areas – but at the cost of very substantial dis-saving by the government, because of the scale of those subsidies," he said.
However AMP chief economist Bevan Graham disagreed with Brash.
He said one of the good things is that KiwiSaver is starting to engender the culture of savings in New Zealanders.
That point was supported by Raewyn Fox, the chief executive at the NZ Federation of Budgeting Services.
She said her members had seen that KiwiSaver was helping people who attended budgeting services develop a savings habit.
Graham said the government spending on KiwiSaver, through mechanisms like the Member Tax Credit (MTC), has been worth it to get a savings culture started.
The government halved the MTC in this year's budget and Graham expects this to be the start of a cutback trend.
He warned delegates more such changes will happen.
| « News Round Up: August 29 | KiwiSaver mismatch a 'huge challenge' for advisers » |
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Comments from our readers
"KiwiSaver is a cyncical bribe."/"Come and join my KiwiSaver scheme"
"KiwiSaver hasn't helped anyone save money for retirement" / "1.7m people have now joined KiwiSaver"
In the face of this, we are meant to drop our bacon sandwiches and gather round his feet in wonder over the athleticism of his mind.
Trouble is, if we do that, he will talk long into the night about the academic studies that prove his latest opinion du jour. Then the audience's eyes glaze over and thoughts turn to absolutely anything else.
Kiwisaver is a great idea, but is only part of the equation. It does encourage retirement savings, but many people are still too ignorant to seek better advice on a full and comprehensive retirement plan.
Kiwisaver will get even better when our employer rates match those in Aussie - 9% - then it will be gangbusters.
God I hate these half witted politicians making "brash" statements when they don't have a clue!
But in the long run, KiwiSaver and the improved savings culture will be critical to ensuring a stable retirement and reduced dependency on the Crown.
As KiwiSaver balances increase, people will have more incentive to follow the markets. This interest and education should result in increased savings outside KiwiSaver, all to the benefit of the NZ economy.
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