BREAKING NEWS
One-year-old child locked in a car in supermarket parking lot ... Read more
Close

Kiwi retirement savings fall short

Last updated 14:40 18/02/2014

Relevant offers

Money

Student loan borrowers seeking bankruptcy as millions in debts wiped due to insolvency One in 10 New Zealand families fell into 'Struggle Street' since 2006 Sellers wait for a premium while buyers take their time: Realestate.co.nz NZ real estate listings get Chinese translation on sites like Hougarden.com Kiwis 'drowning in housing debt', Labour says after Statistics NZ figures Peer-to-peer marketplace Harmoney makes it easier for ordinary folk to turn lender Saving for a solid retirement isn't as hard as many KiwiSavers think House to sell at online auction with $1 reserve Beware 'heat not burn' tobacco devices, e-cigarette seller warns Ministry of Health Kiws feel wealthier and spending more as property values increase

New Zealanders need to save more to maintain their standard of living after they retire, a fund provider says.

KiwiSaver fund operator Mercer released a report this afternoon analysing the areas of debate about KiwiSaver including contribution levels, taxation of contributions, life-cycle investment and the age of accessing retirement savings.

It said a higher contribution rate was needed to secure a more sustainable retirement outcome.

New Zealanders put in a minimum of 6 per cent of their wages made up of a 3 per cent employee contribution matched by their employers.

Mercer said a contribution rate of between 8 per cent and 10 per cent shared between employees and employers would allow Kiwis to enjoy a comfortable retirement and make the system competitive with other countries.

An increase in minimum contributions should be phased in to avoid discouraging membership of the scheme.

The increase could initially be applied to employers' contributions only to be more "palatable", Mercer says.

Mercer said there should also be a review of the taxation of contributions to KiwiSaver to encourage individuals to increase the amount saved.

At present there are no incentives to save more than the compulsory rate, and long-term saving was disincentivised by the tax.

The KiwiSaver operator strongly supported auto-enrolment in KiwiSaver be extended to all employees not already enrolled. At present only new employees are automatically enrolled as they join a workplace.

Greater coverage would lead to increased financial security for retirees, growth of the funds industry and an injection of funds into the wider economy. It would also provide an important step towards reducing reliance on New Zealand super, Mercer said.

The fund provider said New Zealand Superannuation was unlikely to continue to fund an acceptable quality of life for most people.

Ad Feedback

- Fairfax Media

Special offers

Featured Promotions

Sponsored Content