KiwiSaver beat expectations, but could be better: FSC
KiwiSaver has been the New Zealand’s most successful savings innovation in the last hundred years, the Financial Services Council says.
Thursday, July 3rd 2014, 6:00AM
Chief executive Peter Neilson said, seven years after its launch, there were a number of reasons why it had beaten expectations.
He said the main reasons were that for those who found it hard to save, KiwiSaver made it easy to enrol and put the money away before it could be spent, and the kickstart incentives and matching employer contributions made it a no-brainer for most New Zealanders.
Neilson said as KiwiSaver members saw their balances grow, they were understanding the benfit of saving a bit each week for a long time.
More than 15,000 people have used their KiwiSaver accounts to buy their first homes.
He said: “We now have more than 2.3 million New Zealanders in KiwiSaver, more than three times the Treasury’s $700,000 initial estimate but we can make it even more successful.”
He said most people were saving at the 6% rate, of 3% from themselves and 3% from their employer. “To fund a comfortable retirement on about two times the NZ Super pension income would require the contribution rate to go to 9% or higher. If KiwiSavers defaulted into a balanced or growth fund rather than a conservative one and the over-taxation of KiwiSaver funds was addressed, the contribution rates required to fund a comfortable retirement could drop.”
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