Research centre pans KiwiSaver changes

Littlewood, who is joint head of the Retirement Policy and Research Centre at the University of Auckland alongside Susan St John, says the changes “took the retirement savings industry and policy community by surprise.”

He says the “On the eve of KiwiSaver’s starting date (1 July 2007), it seems the government was not confident that KiwiSaver Mark I would produce the changes to saving behaviour that it wanted.”

Consequently it made a number of changes including tax-funded subsidies for employee and employer contributions and compulsory employer contributions that, in the future, will have to match the employee’s contributions of 4% of pay.

Littlewood says there is evidence to support the argument that there is no widespread under-saving for retirement.

Littlewood says Treasury has now published an alternative view, one that tries, and, in PensionReforms’ view, fails to support the government’s radical changes to KiwiSaver.

“PensionReforms believes that KiwiSaver should have been implemented without the radical changes just announced.

“It is alarming that such a major government intervention is announced without consultation and with so little analysis of how it might actually achieve its goals in enhancing either individual or overall savings.”

The centre’s site, PensionReforms, produce papers that debate whether a government can change the overall, long-term financial behaviour of its citizens.

“The evidence is not encouraging for governments that set out to make a difference.”