Debate on whether to continue with a voluntary retirement savings regime or to switch to one based on tax incentives or compulsion is premature, according to the Investment Savings and Insurance Association (ISI).
First of all the Government needs to address a number of key policy issues to ensure the right framework is in place to encourage savings.
The association yesterday released a report on retirement savings that concluded there is an urgent need to address the policy issues. It says the Government needs to:
* Remove the regulatory and tax impediments to economic growth
* Address tax issues and make sure investors have a tax neutral investment environment
* Curb Government spending
* Revisit immigration policy
* Set state pensions at a level where they encourage savings, and only provide a safety net
* Increase private saving levels.
The report, called A Wake Up Call, takes the work of the Todd reports one step further and does some more comprehensive economic modeling.
ISI chief executive Roger Gill says A Wake Up Call was commissioned as people believed following the referendum and the Period Review Group's report on retirement income polices that there was plenty to sort out super policy.
Rather there is a limited window of opportunity to address the issues. He says maintaining the status quo could lead to large costs being imposed on future generations.
''A multi-faceted approach offers the best chance of success, at the least cost,'' Gill says.
"The report also emphasises that the consequences of putting off decisions will require far more drastic remedial action in future than would be the case if pre-emptive steps were taken now."
One of the report's authors, economist Gareth Morgan, says A Wake Up Call is designed to build on the Todd report not replace it.
Raising the age of entitlement for New Zealand Superannuation, as well as reducing the level of the state pension would help the affordability equation, but they would not balance it.
Fellow author Jonathan Eriksen estimates the window of opportunity to address the savings problems is quite small and policies would need to be in place no later than 2003.
Debate on whether to continue with a voluntary retirement savings regime or to switch to one based on tax incentives or compulsion is premature, according to the Investment Savings and Insurance Association (ISI).