by Susan Edmunds
Commerce and Consumer Affairs Minister Jacqui Dean has released the Government’s response to the Retirement Commissioner, Diane Maxwell’s, review of retirement income policies.
Maxwell made a range of recommendations as part of her three-yearly review, to improve New Zealanders' retirement outcomes.
“Earlier this year the Government announced key changes to superannuation settings which are in line with the Commissioner’s recommendation,” Dean said.
“The review also addressed other key areas including KiwiSaver settings, the ageing workforce, and assistance to vulnerable groups in retirement."
She said the Government was committed to raising levels of financial capability to help more New Zealanders have financial security in retirement.
It has already moved on Diane Maxwell’s suggestion that the age of eligibility for NZ Super be increased to 67, and increasing the length of residence required from 10 years to 25.
It has also announced its intention to decouple KiwiSaver from the age of eligibility for super, will allow people over 65 to join and is requiring KiwiSaver providers to disclose the total dollar cost of all fees in their annual statements, as well as requiring them to indicate the eventual balance a member is on track to achieve.
But while it is not proposing to follow Maxwell's suggestion to increase the minimum employer and employee contribution rate from 3% to 4%, Dean said the Government supported increasing the range of contribution rates. Maxwell had suggested 6% and 10% as options.
Dean said it was also undertaking work to understand why members were not contributing. It was supportive of the recommendation to increase KiwiSaver coverage. She said more work was needed to assess the impact of and options for introducing additional ways for members to contribute. There have been suggestions that KiwiSaver should be made compulsory.
Dean said more work was needed to consider the compliance costs for employers and the administrative impacts for Inland Revenue before the Government could commit to the change.
It would not remove the non-qualifying partner option or the direct deductions policy for overseas state pensions.
Dean said the Government agreed that as KiwiSaver balances and demand increased, it was likely that KiwiSaver providers would innovate and offer more drawdown options for members.
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