Financial Capability Commissioner calls for KiwiSaver vote
The Commission for Financial Capability is asking New Zealanders what changes they want to KiwiSaver, as part of a review of retirement income policies.
The commission, headed by Diane Maxwell, has developed a shortlist of eight ideas after speaking with KiwiSaver providers, government agencies and a portion of the public.
It is now asking everyone – whether they are KiwiSaver members or not – to vote as to whether the ideas are good or not.
The public’s views and comments will help shape recommendations for the government, as part of the commission’s three-yearly policy review.
The suggestions include whether more flexibility in contribution rates is a good idea – it’s now fixed at 3%, 4% and 8% – or whether the maximum contributions holiday period be reduced from five years to one year.
“People have told us that the jump from 4% to 8% is too big and they would like to have other choices. If that encourages people to contribute more to their retirement savings, then it’s worth looking at,” the commission’s investor education group manager David Boyle says.
“But there are also people who find 3% is too high and we wonder if a lower rate of 1% or 2% for a limited period would reduce the number of people taking contributions holidays and help more people get started.”
Last year, out of KiwiSaver members who had opted for a contributions holiday, 83% were on a five-year break. The commission wonders whether this is too long, and instead a one-year maximum holiday period, with the option to renew it one year at a time, could help people resume regular savings sooner.
Other suggestions include requiring KiwiSaver providers to show the total dollar amount you paid in fees on an annual statement, letting people over 65 join the scheme, and asking whether members should be allowed to join more than one KiwiSaver scheme.
Another option is to increase contribution rates by up to 1% automatically, or there should be a one-off enrolment day to automatically sign up people who aren’t KiwiSaver members.
“We’re not saying that all of the suggestions should be introduced. We want to know what New Zealanders think,” Mr Boyle says.
KiwiSaver providers and government agencies the commission has spoken to have indicated some of the ideas could have a significant impact if they could be implemented without too much cost, he says.
“However, there would still need to be more work around the practicalities of implementing them.”
About 2.5 million New Zealanders have joined the retirement savings scheme since it began in 2007.