Radical rethink for retirement savings needed
Sovereign says a radical rethink for retirement savings policy is needed.
Monday, February 24th 2003, 11:20PM
"The education programme aimed at getting New Zealanders to save for retirement needs a radical rethink," Sovereign managing director Simon Swanson says.
"Of greater concern is that a growing number of Kiwis believe the Government will provide an adequate retirement income. The proportion of people who believe this has doubled in the past three years to 18%.
"This is a real concern because it shows that the Government’s retirement savings messages are not getting through to every-day Kiwis.
"As the population ages, the issue of retirement provision for New Zealanders will only exacerbate if this trend continues.
"The Kiwi dream of a retirement nest-egg is hanging precariously in the balance while large proportions of New Zealanders continue to choose not to save.
"Sovereign is committed to the Government’s three-tiered approach to superannuation, but it will not work while more and more New Zealanders believe that the Government will provide an adequate retirement income—it will not.
"Our findings show New Zealanders know they need to start saving, but they aren’t doing anything about it, and it doesn’t just relate to those on low incomes," he says.
Sovereign’s findings also reveal that the low commitment to retirement savings is not necessarily linked to income—40% of people, not yet retired, with household incomes over $50,000 per year are not saving for their retirement.
December 2001 through to December 2002 saw an outflow of $540million from superannuation (industry-wide).
"This is not just an industry issue or a Government issue, it is an issue for every New Zealander," Swanson says.
The latest result does show a slight increase (4%) in people who have started saving for retirement in the last three months, however the overall trend remains relatively consistent since 1997, with about 57% who are saving.
Further Sovereign findings reveal:
- Nearly half of the sample find it difficult to decide where and how to save for retirement.
- 79% of New Zealanders feel that if there was a tax incentive to save, they would save more than they do now, with 92% in favour of a tax incentive to encourage people to save.
- In the biggest split of opinion, 58% of people believe that paying off the mortgage before saving for retirement is the most sensible option.
This is a press release from Sovereign
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