Sharechat Logo

Tweak taxes, lift minimum KiwiSaver contributions, FSC urges

Friday 7th September 2018

Text too small?

The Financial Services Council is urging the government to add sweeteners and raise minimum contributions to KiwiSaver if it's serious about ensuring New Zealanders enjoy a well-funded retirement. 

The industry lobby for fund managers and insurers outlined four recommendations in a report seeking to bridge the $218 average weekly shortfall someone will need in retirement to live comfortably. At the top of the list was increasing the minimum employee and employer contribution to 4 percent each, something 70 percent of respondents in accompanying research would support. The paper also recommends a review of default fund allocations, "further tax or other simple incentives" to encourage savings, and a decoupling from the retirement age. 

"The recommendations are ambitious and it's heartening to see the government is making moves to address some of these issues. It's a great start," FSC chief executive Richard Klipin said. "We believe they are achievable and they will provide a blueprint for closing New Zealand's future savings gap." 

Finance Minister Grant Robertson last month told the NZ Shareholders' Association he's targeting the missing million people not in KiwiSaver in an upcoming review of default providers, while the Retirement Commissioner will also investigate KiwiSaver fees and investment practices in the 2019 review of retirement income policies. 

The FSC report also recommends cross-party work on a superannuation strategy to "ensure that the most vulnerable in our society are protected". New Zealand's pension age and universal entitlements are a highly political issue, with independent reviews and Treasury advising an increase in the age as a means to address rising life expectancies and the associated increase in health costs. 

The final recommendation is to make it easier for people to access advice and switch between providers. Financial Markets Authority research has found few people get personalised advice for their KiwiSaver investments and has provided an exemption for automated digital advice, known as robo-advice, ahead of a legislative change to the adviser regime. 


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares gain as Trade Me hits record on takeover
NZ dollar higher against USD as jitters about China-US trade tensions recede
Rakon boosts bank funding to meet increased telco demand
Underfunded Overseer farm management tool needs thorough review: Upton
Motor vehicle lending helps UDC lift annual profit 6%
Orr says RBNZ still under-resourced, funding model part of second phase of review
Leading business brokerage firm LINK raises a further NZ$3.45m in capital
Travel insurance and the AirNZ strike
Industrial heat a challenge for cost-effective emissions reduction
Hallenstein Glasson wary of margin squeeze in second half

IRG See IRG research reports