KiwiSaver Reform Next Steps: Bail Up a Politician

Highlights:

• The Retirement Commissioner urges the financial services industry to promote the KiwiSaver Opportunities for Improvement Report to politicians for significant reforms.
• Key recommendations include a higher default contribution rate of at least 4%, increased government contributions for the self-employed, and mandatory employer contributions for over 65s and under 18s.
• A national strategy for financial capability is being revamped, with new goals launching in August to enhance public financial growth and better collective messaging from the financial advice sector.

The Retirement Commissioner Calls for Support

The Retirement Commissioner, Jane Wrightson, has released her recommendations for enhancing KiwiSaver and is seeking support from the financial services industry to get politicians to take notice. Speaking during a Harbour Asset Management webinar, Wrightson emphasized the need for cohesive messaging about retirement planning products and services.

Engaging the Financial Services Industry

Wrightson urged the financial services industry to actively promote the KiwiSaver Opportunities for Improvement Report to politicians. Highlighting governance issues within KiwiSaver, she noted that its oversight currently involves three ministers, yet none have specific responsibility, often leading to its neglect.

“It would be helpful, as I’m trying to tackle three ministers, if the industry can form a composite view on the report,” Wrightson stated, calling for industry members to raise awareness among politicians and emphasize the work needed on KiwiSaver.

Key Recommendations from the Report

The report presents 15 non-binding recommendations for government action, including maintaining KiwiSaver as an opt-in scheme. Although previously advocating for compulsory KiwiSaver, Wrightson now suggests a higher default contribution rate of at least 4%, with employers matching, while retaining the 3% rate for those who cannot manage higher contributions.

Other recommendations include:

• Limiting membership to one KiwiSaver provider
• Increasing government contributions for the self-employed
• Mandating employer contributions for those over 65 and under 18
• Removing total remuneration approaches by employers
• Extending government contributions to individuals on paid parental leave

Long-Term Strategy and Industry Collaboration

Wrightson emphasized the necessity for long-term planning beyond electoral cycles, advocating for cross-party talks to secure a consensus on KiwiSaver’s future. “KiwiSaver shouldn’t be affected by knee-jerk political decisions,” she said, urging a focus on its role as a retirement fund rather than merely a savings vehicle.

National Strategy Revamp

Additionally, the Retirement Commission is overhauling the national strategy for financial capability, seeking industry input. In August, new goals will be launched to help people grow their money. Wrightson criticized the financial advice sector’s lack of a collective approach, calling for consistent messaging to better serve the public’s retirement planning needs.

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