Incentives not a savings panacea: Cullen

Finance minister Michael Cullen says the Government's proposal to prefund NZ Super is only one part of the answer to the savings crisis facing this country.

He also says introducing tax incentives for retirement savings should not be seen as the panacea to increasing savings rates.

"Security in retirement is the least that citizens should expect from their government in a civilised, developed country. It is also the most they should expect. It is not the function of the government to maintain in retirement the incomes that people earned during working life. That is the responsibility of the individual.

"This is one reason to reject compulsory individualised, earnings based savings: the government is intruding too far into what ought to be personal decisions about how to spread consumption over the life cycle."

He says there are three elements need to construct a positive savings environment: education, opportunity and incentive.

"Education is the responsibility of the government and the industry. Opportunity is the responsibility of the industry; the product they offer has to be relevant. Incentive is the responsibility of the government," he says.

"I must stress that incentives alone are not the answer. They will not work if the educational work has not been done and the opportunities to save are unattractive."

Cullen also outlined further details of how a regime of tax incentives may work.