Association to lobby minister for KiwiSaver changes

Financial Advice New Zealand is making a set of KiwiSaver recommendations to Commerce Minister Kris Faafoi in the wake of the 2019 Wellbeing Budget.

Friday, May 31st 2019, 6:00AM

“There is a clear link between wellbeing and financial confidence and capacity,” said Katrina Shanks, chief executive.

“To help New Zealanders build a successful future, access to quality advice and confident use of tools such as KiwiSaver, is essential.

“Sixty-eight per cent of New Zealanders have money worries and 44% could access only one month or less of income from savings or other means. That’s two of the many very concerning statistics that access to quality financial advice can greatly aid in improving.

“KiwiSaver advice for young New Zealanders starting work is a prime example: we want to see more young Kiwis able to access quality advice on this essential savings tool at the beginning of their working life; to help give them confidence and capacity to build financial wellbeing.”

The association's recommendations cover three key points.

Default schemes: There are still 20% of KiwiSaver members in a default scheme, which Financial Advice NZ said was primarily because they were unaware of the options and what was right for them.

“We believe the Government should provide assistance for existing and new KiwiSaver participants to access financial advice through the workplace or through an approved financial adviser register. This will give more Kiwis the ability to assess the schemes and what is best for their needs,” Shanks said.

Contribution rates: Shanks said KiwiSaver members should be able to choose their own contribution levels.

“Currently the minimum contribution of 3% is prohibitive for Kiwis on low incomes; and the maximum of 10% is limiting for those who may want to fast-track their savings.

“We recommend that there be no set contribution rate except for a minimum of 3% for members, as well as the introduction of a 1% contribution for low-income earners and beneficiaries.”

AML: She said people who were self-employed or under 18 had higher regulatory requirements to join KiwiSaver.

“Common sense indicates that the level of risk of money laundering and terrorism activity through a KiwiSaver plan is low, and as such the AML requirements for this group of Kiwis is an unnecessary barrier to participation. We recommend that all KiwiSaver participants be excluded from AML requirements."

Meanwhile, the Financial Services Council welcomed the long-term focus and consideration of a broader set of policies measures in the Budget.

We know from our day-to-day work that success and wellbeing for New Zealanders requires more than a pure focus on economic growth and GDP and it’s good that the Budget now explicitly recognises this,” said chief executive Richard Klipin.

“We’re particularly heartened to see a focus in the Budget on multi-generation initiatives and a recognition of the need to taking a long-term approach to solving New Zealand’s most pressing challenges.

“Our sector is all about taking a long-term approach and planning for the future and it’s pleasing to see the Government aiming to bring a similar discipline to the country’s finances."

He said the $55 billion in KiwiSaver showed the benefits that could be delivered with a long-term policy approach.

The new fund to help grow New Zealand firms beyond the start-up phase was also welcome, he said.

“The Wellbeing Budget represents a new approach and we look forward to discussing it in detail and what wellbeing means for the financial services sector at our national conference later this year."

Tags: Budget Financial Advice New Zealand FSC