Muldoon’s legacy still haunting advisers
The financial advice industry in New Zealand would be much larger if it weren’t for the axing of compulsory superannuation nearly 40 years ago, industry figures say.
Tuesday, January 15th 2013, 8:03AM 
5 Comments
by Niko Kloeten
A new Horizon Research survey commissioned by the Financial Service Council has found 73% of New Zealanders think it was a mistake for then-Prime Minister Robert Muldoon to do away with the fledgling scheme after he was elected in 1975.
The scheme, established by the Labour government in 1974, was similar to KiwiSaver and required contributions of 8% of income (4% employee/4% employer).
FSC chief executive Peter Neilson said the scheme would have had a big impact on demand for financial advice if it had been left intact.
“Brian Gaynor has estimated that if the scheme had gone ahead it would be worth more than $240 billion, which is much bigger than what the industry is today,” he said.
“If you think about $240 billion versus $14 billion it’s pretty hard not to say there would be a bigger market [for financial advice].”
Neilson said New Zealand had been 20 years ahead of Australia, which introduced its own compulsory scheme in 1992, but is now 20 years behind.
Hawke’s Bay financial adviser Mike Shaw, who was working when the scheme was introduced, said it was “the saddest thing” that it was cancelled.
“I think it would have been a positive thing for the New Zealand financial planning industry. We would have had a whole lot of baby boomers coming to their retirement with large lump sums,” he said.
Shaw said if the scheme had been kept New Zealand would be “on level” with Australia but New Zealand advisers might have “gone down the same road” as their Aussie counterparts.
“Most Australians I know in super schemes aren’t in self-managed funds; they’re in managed funds with the advisers taking rather large fees.”
The FSC also found 59% of those surveyed supported KiwiSaver being made compulsory for all employees.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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I was with South British at the time and we managed hundreds of schemes for individual companies.
And just to nit-pick Niko, the contributions were actually set at 6% by the company and 4% by the employee, but were to be phased in starting @ 1.5% and 1% respectively
See if you recognise some of the base points
Why not instil a savings habit into young kids.
It is not the amount at that age...it is the habit.
Just like it is automatic to wash your hands after the toilet, so it can very easily be duplicated in regard to savings habits.
we were taught to automatically save our bob or threepence into our squirrel Post Office savings bank every Wednesday.
Why has a savings scheme not been re-instated into primary schools?
then the job of the financial planner in "grown-up" years would be so much easier.
You get the jist??
Michael Donovan
David, while I agree that we should look forward you must always be mindful and learn from what has been in the past.
The 1976 scheme was abolished because people did not want to contribute and believed the propaganda put out by the the National Party. There can be no doubt that New Zealand would have a very different (and I would argue better) economy had the scheme not been abolished.
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The advice industry should be careful not to put its interests ahead of investors.