Majority support for six of eight options to change KiwiSaver

Retirement Commissioner Diane Maxwell is set to reveal her recommendations for changing KiwiSaver.
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Retirement Commissioner Diane Maxwell is set to reveal her recommendations for changing KiwiSaver.

Retirement Commissioner Diane Maxwell will tomorrow reveal changes she believes should be made to KiwiSaver.

It's part of her three-yearly duty to advise Parliament on retirement income policy.

And though she's keeping the recommendations under wraps until the big reveal, a survey of eight options reveals what changes the public might support.

If the NZ public had its way, KiwiSaver contribution levels would change.
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If the NZ public had its way, KiwiSaver contribution levels would change.

If the majority had its way, KiwiSaver contribution levels would change, and some KiwiSaver providers would have to be much clearer about what they charge in fees.

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Earlier this year an online survey done by the Commission for Financial Capability, which Maxwell heads, gathered the opinions of just over 1800 people on eight options for tweaking KiwiSaver.

Some of the recommendations, such as limiting contribution holidays and making KiwiSaver providers quote fees in easy-to-read dollar terms, are hot tips for Maxwell to recommend, as is letting people aged over 65 open KiwiSaver accounts.

But a question mark remains over whether she would support others, and it's understood there are recommendations she will make which were not included in the survey.

Anything that increases KiwiSaver membership and savings rates will end up costing the taxpayer more in annual "member tax credit" subsidies. Under the National government KiwiSaver costs have been trimmed by halving the member tax credit and removing the $1000 kickstarter incentive to join KiwiSaver.

ANNUAL FEES IN DOLLAR TERMS: 97 per cent of survey respondents said KiwiSaver providers should be forced to quote fees in easy-to-read dollar terms on savers' annual statements.

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FLEXIBLE CONTRIBUTIONS: 85 per cent would welcome more flexibility to choose their own contribution level. Currently, the only choices are 3 per cent, 4 per cent or 8 per cent of pre-tax salary, though people can make additional voluntary contributions.

"STRUGGLE" CONTRIBUTION RATES: 72 per cent supported new 1 per cent and 2 per cent contribution rates for people struggling to afford to save 3 per cent.

CONTRIBUTION INCREASES: 69 per cent liked the idea of contribution rates automatically increasing each year by 0.5 per cent or 1 per cent, meaning savings rates would gradually rise.

KIWISAVER FOR THE ELDERLY: People over the age of 65 who started saving before they reached 65 can leave their money in KiwiSaver, and carry on contributing. But people who are already 65, but aren't enrolled in KiwiSaver can't join. 62 per cent thought over 65s should be allowed to open KiwiSaver accounts to give them another investment option.

LIMIT CONTRIBUTION HOLIDAYS: 52 per cent agreed the maximum voluntary contribution holiday period should be reduced from five years to one year. It appears many people setting up contributions holidays pick the "default" five-year period, and then simply forget to start contributions again meaning they miss out on many years of employer contributions and taxpayer subsidies.

MULTIPLE MEMBERSHIP: Only 35 per cent of people thought people should be allowed to be a member of two KiwiSaver schemes at the same time.

ONE-OFF MASS ENROLMENT: Just 34 per cent of people thought there should be a one-off mass enrolment day, where everyone not in KiwiSaver gets enrolled. They would be allowed to opt out, if they didn't want to be a member.

 - Stuff

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