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That could go as far as some sort of means testing on New Zealand Superannuation, a Pension Commentary from the University of Auckland Retirement Income and Policy Centre says.
Labour is the first political party to offer detailed policy on KiwiSaver in the run up to this year’s election.
Because savings is such a big national issue, political parties should have “prior public discussion” on the issue before releasing policy, he says.
“Labour’s announcements create a point of difference with the current government’s policies but that should not be the objective of saving and retirement income policies – they are too important for that.
“New Zealanders deserve a full debate on all issues associated with the financial implications of an ageing population. KiwiSaver must be part of that debate, but cannot be seen as independent of the whole retirement income framework.”
Littlewood says Labour’s KiwiSaver plans are not universal as it claims, because some people are exempted from contributing.
“Labour’s version of KiwiSaver is not ‘universal’ and to call it that is to devalue the word’s meaning in the retirement income context.
The policy is compulsory, in the same way that Australia’s Superannuation Guarantee (SG) scheme is compulsory.
“Labour’s proposals will move New Zealand’s retirement income policies in Australia’s direction.”
He suggests that under this proposal New Zealand could become like Australia where there is means-testing applied to the state-pension (NZ Superannuation).
“If Labour, as it appears, wants to increase national saving then a compulsory KiwiSaver will raise the risk of some offset to NZS being imposed.”
He says this was part of the policy New Zealanders voted against in a referendum in 1997.
“If Labour wants compulsory KiwiSaver to be the pathway to increased self-provision for retirement, we need to be mindful of the offsets that will occur.
“More KiwiSaver savings may reduce saving in other ways, including slower debt-repayment. Counting the money in the compulsory scheme’s accounts (an approach favoured by financial service providers) does not tell us what is happening to total household financial wealth including holdings in other managed funds, let alone total household wealth including property assets.”
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