Latest news with #KiwiSavers
Scoop
22-05-2025
- Business
- Scoop
KiwiSaver Changes An Opportunity To Improve Retirement Outcomes For All
KiwiSaver changes announced in today's Budget, including lifting the default employer and employee contribution rate to 4% and extending the government contribution to 16 and 17 year olds, mark a significant opportunity to boost retirement outcomes for more New Zealanders, says Pie Funds CEO Ana-Marie Lockyer. Lockyer, a long-time advocate for improving New Zealanders' retirement outcomes and improving equity in the system, welcomed the focus on targeting government contributions to younger KiwiSavers. 'I'm pleased Finance Minister Nicola Willis has listened and acted with the future in mind. Overall, these changes reflect the Government's desire to ensure the sustainability of KiwiSaver and a comfortable retirement for all New Zealanders.' Contribution rates need to reach 10% The increase in minimum employer and employee contributions from 3% to 4% by 1 April 2028 is a step in the right direction - but Lockyer emphasised the need for this to eventually rise to a combined rate of 10%. 'A 10% combined contribution rate would help ensure a good standard of living in retirement, but we need to get there gradually,' she said. 'I'm pleased to see the increases are phased and clearly communicated, so lower-income earners in particular aren't discouraged from participating due to affordability concerns, and employees can plan ahead.' Lockyer also emphasised the long-term national benefit of growing individual savings. 'The more New Zealanders save over time through KiwiSaver, the more we can offset the growing fiscal burden of superannuation on future governments.' Encouragement for younger KiwiSavers Lockyer backed making the government contribution available to 16 and 17 year olds from 1 July 2025 - while questioning why it wasn't extended to older KiwiSavers still working. 'Thanks to the benefits of compounding interest, the earlier you start saving in life, the better your position at retirement will be. Providing more incentives to young people to save encourages stronger, more consistent contributions.' 'However, I would have liked the government contribution to be available to the increasing number of over-65s who are still working, whether by choice or necessity. They need support to save for their retirement, too.' Lockyer also acknowledged halving the maximum government contribution to $261 from 1 July 2025. 'Even a reduced annual government contribution of $261 per year can grow to more than $41,000* over a KiwiSaver member's working life. That's life-changing support for many Kiwis.' Focus must remain on outcomes With KiwiSaver under increasing focus as balances grow, Lockyer stressed the system must continue to evolve to serve the retirement needs of a broader and more diverse New Zealand. 'KiwiSaver has gone from strength to strength since it launched in 2007, and we recognise today's changes reflect the Government's tough prioritisation decisions in a constrained fiscal environment. This is a moment to start reshaping KiwiSaver into a fairer, more effective tool that helps more New Zealanders retire with dignity.' *Based on a 16 year old receiving the $261 government contribution to age 65 (not adjusted for inflation). Source:
Scoop
01-05-2025
- Business
- Scoop
KiwiSaver Providers Mull Possible Changes To ‘Free' $521 A Year
But is the bigger question why so many people miss out? , Money Correspondent KiwiSaver providers are divided on whether changes to the $521 offered by the Government to each KiwiSaver member every year could be positive for the scheme. Speaking to NewstalkZB on Tuesday, Finance Minister Nicola Willis would not rule out changes to the KiwiSaver subsidy, including means-testing the contribution. Her office has been asked for further information. KiwiSaver contributions cost the Government about $1 billion a year, with $521 available to every member who contributes at least $1042 in a year. A criticism of the member tax credit is that it generally goes to those who can afford to save and invest in KiwiSaver, rather than lower-income households. Willis has already signalled a desire to see higher contribution rates to KiwiSaver. Pie Funds chief executive Ana-Marie Lockyer was encouraged that KiwiSaver was up for review and that Willis was considering all options to improve the settings to support retirement outcomes for New Zealanders. 'It's sensible to assess whether the $1.1 billion annual spend is delivering the best possible outcomes in line with the goal of comfortable retirements for all New Zealanders,' she said. Lockyer was not opposed to Government spending targeted to better address inequities in KiwiSaver, which she said would be better than removing the incentive altogether. 'It's important the review isn't seen purely as a cost-saving exercise, but rather as a way to retarget the benefit to those who need it most. 'Care is needed to ensure the change doesn't discourage engagement from low to middle-income earners. Remember, the $521 on its own can become $76,000 for a KiwiSaver member over time.' She said redirecting support to lower-income earners would not change the appeal of the scheme for many members. 'Particularly those who receive the Government contribution by default, as their incomes automatically qualify them, but [it could] positively improve equity and entice more New Zealanders at the lower end of the income spectrum to join KiwiSaver and contribute regularly – leading to more people achieving better long-term financial outcomes and ultimately reducing longer-term dependence on government support.' 'Means-testing the Government contribution could help ensure lower-income earners get proportionately more support, potentially encouraging more participation from that segment.' A third missing out Lockyer said a bigger issue was the number of people not receiving the government contribution or not getting the full amount. 'In 2024, the government paid around $990m,' she said. 'Based on nearly 3 million KiwiSavers between 18 and 65 total, payments have the potential to be closer to $1.5b, so nearly a third appear to be missing out. 'There are many reasons for this, but in some cases, they may well be the members that need support growing their long-term retirement savings.' Kōura Wealth's Rupert Carlyon said removing an incentive to saving would be short-sighted, when NZ Super was not sustainable in its current form. 'The $521 is not really enough, although in an ideal world, we would be looking at the Australian system, where they use a combination of means testing and real incentives to ensure the long term sustainability of superannuation. 'It shows where current Government priorities lie though, when they are looking at cutting $1b of spending to help people's futures, so they can fund an extra $1.5b in NZ Super next year. 'What do they have to cut the following year to ensure they can keep providing super at the same levels? Yup, NZ Super cost grows at about $1.5b each year.' Milford Asset Management's KiwiSaver head Murray Harris said Government changes to the contribution would be a 'real shame'. 'It's one of the main incentives and reasons why people contribute, especially for the self-employed, who don't benefit from employer contributions.'
Scoop
01-05-2025
- Business
- Scoop
KiwiSaver Providers Mull Possible Changes To 'Free' $521 A Year
KiwiSaver providers are divided on whether changes to the $521 offered by the Government to each KiwiSaver member every year could be positive for the scheme. Speaking to NewstalkZB on Tuesday, Finance Minister Nicola Willis would not rule out changes to the KiwiSaver subsidy, including means-testing the contribution. Her office has been asked for further information. KiwiSaver contributions cost the Government about $1 billion a year, with $521 available to every member who contributes at least $1042 in a year. A criticism of the member tax credit is that it generally goes to those who can afford to save and invest in KiwiSaver, rather than lower-income households. Willis has already signalled a desire to see higher contribution rates to KiwiSaver. Pie Funds chief executive Ana-Marie Lockyer was encouraged that KiwiSaver was up for review and that Willis was considering all options to improve the settings to support retirement outcomes for New Zealanders. "It's sensible to assess whether the $1.1 billion annual spend is delivering the best possible outcomes in line with the goal of comfortable retirements for all New Zealanders," she said. Lockyer was not opposed to Government spending targeted to better address inequities in KiwiSaver, which she said would be better than removing the incentive altogether. "It's important the review isn't seen purely as a cost-saving exercise, but rather as a way to retarget the benefit to those who need it most. "Care is needed to ensure the change doesn't discourage engagement from low to middle-income earners. Remember, the $521 on its own can become $76,000 for a KiwiSaver member over time." She said redirecting support to lower-income earners would not change the appeal of the scheme for many members. "Particularly those who receive the Government contribution by default, as their incomes automatically qualify them, but [it could] positively improve equity and entice more New Zealanders at the lower end of the income spectrum to join KiwiSaver and contribute regularly - leading to more people achieving better long-term financial outcomes and ultimately reducing longer-term dependence on government support." "Means-testing the Government contribution could help ensure lower-income earners get proportionately more support, potentially encouraging more participation from that segment." A third missing out Lockyer said a bigger issue was the number of people not receiving the government contribution or not getting the full amount. "In 2024, the government paid around $990m," she said. "Based on nearly 3 million KiwiSavers between 18 and 65 total, payments have the potential to be closer to $1.5b, so nearly a third appear to be missing out. "There are many reasons for this, but in some cases, they may well be the members that need support growing their long-term retirement savings." Kōura Wealth's Rupert Carlyon said removing an incentive to saving would be short-sighted, when NZ Super was not sustainable in its current form. "The $521 is not really enough, although in an ideal world, we would be looking at the Australian system, where they use a combination of means testing and real incentives to ensure the long term sustainability of superannuation. "It shows where current Government priorities lie though, when they are looking at cutting $1b of spending to help people's futures, so they can fund an extra $1.5b in NZ Super next year. "What do they have to cut the following year to ensure they can keep providing super at the same levels? Yup, NZ Super cost grows at about $1.5b each year." Milford Asset Management's KiwiSaver head Murray Harris said Government changes to the contribution would be a "real shame". "It's one of the main incentives and reasons why people contribute, especially for the self-employed, who don't benefit from employer contributions."
RNZ News
01-05-2025
- Business
- RNZ News
KiwiSaver providers mull possible changes to 'free' $521 a year
KiwiSaver contributions cost the Government about $1b a year. Photo: 123RF KiwiSaver providers are divided on whether changes to the $521 offered by the Government to each KiwiSaver member every year could be positive for the scheme. Speaking to NewstalkZB on Tuesday, Finance Minister Nicola Willis would not rule out changes to the KiwiSaver subsidy, including means-testing the contribution. Her office has been asked for further information. KiwiSaver contributions cost the Government about $1 billion a year, with $521 available to every member who contributes at least $1042 in a year. A criticism of the member tax credit is that it generally goes to those who can afford to save and invest in KiwiSaver, rather than lower-income households. Willis has already signalled a desire to see higher contribution rates to KiwiSaver. Pie Funds chief executive Ana-Marie Lockyer was encouraged that KiwiSaver was up for review and that Willis was considering all options to improve the settings to support retirement outcomes for New Zealanders. "It's sensible to assess whether the $1.1 billion annual spend is delivering the best possible outcomes in line with the goal of comfortable retirements for all New Zealanders," she said. Lockyer was not opposed to Government spending targeted to better address inequities in KiwiSaver, which she said would be better than removing the incentive altogether. "It's important the review isn't seen purely as a cost-saving exercise, but rather as a way to retarget the benefit to those who need it most. "Care is needed to ensure the change doesn't discourage engagement from low to middle-income earners. Remember, the $521 on its own can become $76,000 for a KiwiSaver member over time." She said redirecting support to lower-income earners would not change the appeal of the scheme for many members. "Particularly those who receive the Government contribution by default, as their incomes automatically qualify them, but [it could] positively improve equity and entice more New Zealanders at the lower end of the income spectrum to join KiwiSaver and contribute regularly - leading to more people achieving better long-term financial outcomes and ultimately reducing longer-term dependence on government support." "Means-testing the Government contribution could help ensure lower-income earners get proportionately more support, potentially encouraging more participation from that segment." Lockyer said a bigger issue was the number of people not receiving the government contribution or not getting the full amount. "In 2024, the government paid around $990m," she said. "Based on nearly 3 million KiwiSavers between 18 and 65 total, payments have the potential to be closer to $1.5b, so nearly a third appear to be missing out. "There are many reasons for this, but in some cases, they may well be the members that need support growing their long-term retirement savings." Kōura Wealth's Rupert Carlyon said removing an incentive to saving would be short-sighted, when NZ Super was not sustainable in its current form. "The $521 is not really enough, although in an ideal world, we would be looking at the Australian system, where they use a combination of means testing and real incentives to ensure the long term sustainability of superannuation. "It shows where current Government priorities lie though, when they are looking at cutting $1b of spending to help people's futures, so they can fund an extra $1.5b in NZ Super next year. "What do they have to cut the following year to ensure they can keep providing super at the same levels? Yup, NZ Super cost grows at about $1.5b each year." Milford Asset Management's KiwiSaver head Murray Harris said Government changes to the contribution would be a "real shame". "It's one of the main incentives and reasons why people contribute, especially for the self-employed, who don't benefit from employer contributions."
