About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Friday, December 6th, 6:43PM
rss
Latest Headlines

Young people should budget to live to 100, actuaries say

New Zealanders are getting information about how to build wealth, but not how to spend it, a group of actuaries says.

Tuesday, December 3rd 2019, 8:53PM

The Retirement Income Interest Group of the New Zealand Society of Actuaries made a submission to the 2019 Review of Retirement Income Policies.

They pointed out that longevity was increasing but New Zealanders were being given insufficient information about how to make their money last.

"Guidance for New Zealanders is better for accumulation than for the decumulation phase."

They said it would be sensible for younger people, especially women, to plan for a retirement that lasted until they were 100.

The group said people should be given KiwiSaver statement wording and underlying projection models that were updated regularly to reflect the latest longevity data, encouraged to consider their decumulation options through to age 90, 95 or 100, and regulations should be introduced for KiwiSaver projections to explain different drawdown strategies and their consequences.

From next year, KiwiSaver providers will have to give annual statements including projections of what their income might look like in retirement. 

"Compared with the accumulation phase (where it is usually agreed that any saving is better than none), decumulation is harder to generalise and there are more risks involved," the group said.

"People have limited resources in later life, especially once they have finished working, so it is hard to recover from a mistake or bad luck.

"Longevity risk can be dealt with by buying an annuity product, but the New Zealand market is currently limited to one product which will not be right for everyone."

Alison O'Connell, lead author of the report that accompanied the submission, said it was unlikely that providing for retirement could be left in the hands of private savings – even for the youngest New Zealanders.

She said New Zealand Superannuation was the best protection against longevity risk.

"It is quite possible that, despite the introduction of KiwiSaver, younger cohorts will need NZS just as much, if not more, than older cohorts, because of lower home ownership, lower wage growth, less stable jobs and lower savings rates.”

She said it would be a policy choice to keep the pension age at 65 – and it was not unaffordable for the country.

The group suggested, if there were to be a change, the age was lifted to a level where future generations could expect to have the same number of years on the pension as earlier generations.

“Even with an eligibility age of 68 years, today's 25-year-olds would be expected to receive NZS for longer than the cohort aged 85 who had an eligibility age of 60 years.”

Tags: annuities decumulation KiwiSaver NZ Super

« Transfer times and why they matter

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

News and information about KiwiSaver

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 ▲4.05 4.49
ANZ Special - 3.55 ▲3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide ▼5.65 ▼4.75 ▼4.75 -
Credit Union North 6.45 - - -
Credit Union South ▼5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.14 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.39 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.39 3.45 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 4 December 2019 9:11am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com