"We are delighted that the Prime Minister has agreed to implement compulsory KiwiSaver if re-elected in this year’s election."
"For the past few years, we have been advocating for compulsory savings through our opinion pieces, public commentary, and Leonard's postgraduate research from Singapore. We saw it as one of the most compelling macroeconomic policies that can help New Zealand become a rich, asset-owning country with deeper domestic capital markets and a stronger external position."
"The lesson from Australia’s compulsory superannuation system and Singapore’s Central Provident Fund is clear: mandatory savings can deepen capital markets, reduce the long-term fiscal burden of public pensions, and create pools of capital that support investment in national development."
"As presciently analysed by former Reserve Bank Governor Graeme Wheeler, New Zealand has for too long relied on housing wealth, high immigration, international tourism, and primary sector exports as the main engines of growth since the 2008 Global Financial Crisis. That model is no longer enough."
"In contrast to economic policies advocated by libertarians, New Zealand needs a comprehensive economic strategy to diversify its economy, and one approach is to develop greater domestic capital and expand public assets, including KiwiSaver and the New Zealand Superannuation Fund."
"The National Party’s commitment to KiwiSaver development signals an important shift in economic thinking. It recognises that New Zealand cannot build long-term prosperity under the status quo of heavy reliance on foreign capital, house price inflation, and chronically low household savings."
"For a centre-right government to accept compulsory KiwiSaver is a major philosophical shift. It recognises that personal responsibility sometimes requires strong institutions and pragmatic paternalism to incentivise higher capital accumulation."
"This unorthodox economic approach provides a more seamless pathway out of a fiscal crisis, and in stark contrast to rapid increases in taxation, monetisation of public debt, or harsh fiscal austerity measures."
"Today’s announcement by the Prime Minister is not the end of that debate, but it may be the start of a new economic consensus."
13 comments:
I’m not happy with compulsory kiwisaver for the reason that it is effectively another tax that you may never see a return on given the long-con that is the money as debt-based fractional reserve banking system will blow up eventually and very likely in our lifetimes.
The Mercedes salesmen will be rubbing their hands with glee. All those milking the system as official 'investment suppiers' will be on the phone upgrading.
The whole thing is a sort to force us to hand over a percentage for nothing. Fix that part and I might be more supportive.
No to compulsion. Try being self employed or even being an employer.
Surely it’s just a redirection of funds government were/are spending anyway, just broken into little bits each with someone’s name on it, rather than unaccountably spent as an amorphous blob
Introducing compulsory super is not effectively another tax. The additional savings required from low and middle earners can be funded from less taxes paid by cuts in corporate welfare & transfers to wealthy households. Over time, compulsory super will mean lower taxes without need for capital or wealth taxes nor increases in GST and income taxes, as there is less pressure on the public purse from the ageing population. In Australia, the public pension draws only around 2-3% of GDP and dropping to 2%, whereas before the PM's announcement it was forecast to go to 8% in NZ. For how it can be implemented, you can read a plan that I worked on here (or go ask Sir Paul Keating in Australia,) =
https://www.tandfonline.com/doi/full/10.1080/00779954.2025.2496872
Yippee, Welcome back Prof MacCulloch, your esteemed commentary on all matters has been missed, do not let the naysayers & backstabbers get to you.
Have to agree with Anon 8:31am. Given that the prospects for any NZ government to ever 'balance the books' seems slim, and ability pay down debt not even on their radar, the trajectory of the NZD, along with that of global fiat currencies is down the toilet with ultimate reckoning probably no more than five years away. A bird in the hand is worth two in the bush! 40-years away today must seem like a lot longer than it did 40-years ago given the rate of collapse is now evident to most. More legacy thinking from the Nats..
Anon 8.31's. comment is typical of the ignorance surrounding KiwiSaver. It is not a tax. It is comulsory savings that are in both your own self interest and the interests of the country, a combination that does not arise very often. The fact of the matter is that with average life expectacy north of 82, National Superannuation in its current form is unsustainable, yet people simply cannot be trusted to save for their own retirement. And the comment on the potential returns is just plain silly and shows a profound ignorance of how the banking system and funds management industry actually works.
I agree with the idea of compulsory saving for retirement and the wealth fund that results, however, the government mandated monopoly Kiwi saver should not be the only option. There should be room for authorised, private, secured savings plans with similar Employer support.
If retirement savings are to be compulsory I think there should be a graded percentage to account for the different circumstances of people on low or higher wages.
Regardless of 10% sounding fair to all it is not fair to take that amount from a low waged family struggling to make ends meet.
The gross wage comparison is
Weekly $1,000 take 100 for kiwisaver, 720 to get by after tax. $2,000 gross leaves 1440 to get by after tax.
With the high cost of living it pushes more people and families into hardship that they can't avoid. Families will be deprived when they need the most income while they have growing children.
More thought should go into income level, age, family and stage of life.
Surely if it is to be compulsory some choice could be given about contribution levels.
Also, where are employers going to magic up an extra 10% on the wages bill?
I do payroll for cleaners of all ages and most of them are keen on KS. But most just can't afford to pay 10%.
I'm baffled by Anon 5.10's comments.
There's nothing compulsory about deducting a 10% employee KiwiSaver contribution, now or in the future.
According to the IRD website the rate at which employee contributions should be deducted is set by the employee at any of 3.5%, 4%, 6%, 8% or 10% of their gross pay. In other words, the employee tells the employer how much to deduct. It's right there on the KiwiSaver Deduction Form KS2. If an employee does not choose a contribution rate, the default rate of 3.5% must be used. Hardly a massive burden for any employee. And no-one who can't afford 10% is going to opt for that rate on their KS2, are they? But surely if Anon 5.10 prepares payrolls s/he must know that already.
And at present the employer contribution is set at 3.5% of the gross wage, not this mysterious 10% that Anon 5.10 is banging on about.
Although National proposes lifting the default contribution rate to 6% for each of employees and employers by 2032, that's still a long way short of the 10% on which Anon 5.10 bases his/her hand-wringing. And even combined, 12% is still only the same rate as the Australians contribute, all of which is payable by employers. And if the cleaners of Sydney can afford to contribute 12% of their employees' wages, the cleaners of Auckland should easily cope with 6%.
Any savings in the bank or elsewhere can easily and will be seized by government in various circumstances where government has the need to prioritise its own functioning over all else. This has happened many times around the world in recent history. Compulsory Kiwisaver will be a comforting gold mine for government to plunder.
How about telling young people; lets say under 40 years. When they retire in the future there will be NO pension if we continue with the current scheme. Tell them they need to start saving now. I talk to young people whom I work with and they have no inclination to save; as they do not know the financial shit we are in.
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