Only 2% of New Zealand households with a household income under $30,000 annually have a workplace savings scheme available to them, compared with 35% of those with an income in excess of $70,000 – meaning the higher your income, the more likely it is you will have a workplace savings scheme as part of your employment package.
That means that lower income earners, who need the most help to get ahead, aren’t currently receiving that help from their employers, according to the latest AMP SuperWatch survey.
“It has been identified that most Kiwis need to save more for their retirement and that workplace savings schemes are key to helping New Zealanders do that,” AMP general manager savings and investment Roger Perry says.
“Plus with a tight labour market, today’s employers need to offer a scheme to make their job offering more compelling.”
When asked about the Government’s Budget announcement that it intended to launch the KiwiSaver initiative, figures from the latest AMP SuperWatch survey showed that 38% of those respondents not already retired planned to join the scheme. And that group tended to be those with a household income under $30,000 with pre-school children, or younger people or couples under 30 years of age with no children.
“This essentially tells us that the KiwiSaver initiative or a similar workplace savings scheme would have some appeal to this particular group,” Perry says.
“We would hope that this group is being attracted by the savings concept rather than purely the $1000 incentive.
“The next challenge a Government would face with a concept like KiwiSaver would be how to get the higher income bracket to start saving more for their retirement. Our figures suggest that perhaps the $1000 incentive outlined in the KiwiSaver concept isn’t enough to entice these higher income earners.
"The KiwiSaver concept is a good start but to really be successful in encouraging all income and age brackets to save, there need to be other elements in the scheme, particularly promotion of workplace superannuation, which will also appeal to other Kiwis.”
The AMP SuperWatch survey also showed that of those New Zealanders not currently retired, 37% are saving for their retirement. Importantly, this figure rises to 63% of those in the pre-retirement age bracket of 50-59 who are putting something away for their retirement.
Those who live outside Auckland are the most likely to be planning for their retirement through some form of savings – 39% of those not retired compared to 29% of Aucklanders not retired.
But even though some Kiwis say they are not saving for their retirement yet, they do have very clear ideas of what they want to do when they retire.
Of those surveyed, 90% said they want to have a debt-free home, 81% want to be able to take holidays or travel, while 72% see themselves financially assisting their family.
The AMP SuperWatch figures also showed that when it came to the question of what the main barriers were for respondents to be able to save for retirement, general earning power was highlighted as a huge barrier, especially for those households earning under $30,000 per annum.
However, for those households with an income in excess of $70,000, the most common reason they also gave as being the largest barrier to saving was not earning enough. Of those Kiwis who say they are saving for their retirement, 45% said they were doing this by paying off their mortgage.
And of those now nearing retirement age – in the 50-59 age group – 36% indicated they are more likely to be seriously considering downsizing their home to free up equity to fund their retirement years.
“So what we are seeing is an indication of reality kicking in for this age group that is nearing retirement,” Perry says. “Earlier on, it’s easy to say that we plan to travel and have a debt-free home and help the family with their financial affairs, but if there hasn’t been a concerted focus on saving for this ‘perfect retirement’, then this can all go out the window.
More Kiwis need to understand this earlier on, not when retirement is literally just around the corner – and have less of a focus on instant gratification now and more on looking to future gratification.”
Those respondents overall aged 30-39 years are more likely to be saving for retirement by paying the mortgage whereas those aged 50-59 years are more likely to be investing directly in shares or a managed fund and those aged 60-69 are more likely to hold their retirement savings in a bank or term deposit.
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