How to fix the retirement system

The Retirement Commissioner Jane Wrightson has issued her wish list to improve the retirement system, calling for cross party agreement, trialling sidecars and more.

Friday, November 14th 2025, 6:52AM

by Jenny Ruth

The Retirement Commissioner Jane Wrightson is recommending increasing government KiwiSaver contributions for low income earners while removing or phasing out government contributions for higher income earners.

Wrightson is also recommending increasing government parental leave contributions to $1,000 regardless of whether employees make KiwiSaver contributions while on leave, mandating ongoing employer contributions for those aged 65 and above and allowing those on temporary student or work visas to be part of the KiwiSaver scheme.

She also wants the government to reinstitute a cross-party accord on retirement incomes.

“The message is clear. We need a long-term political accord to focus on providing certainty for future generations of retirees and stop piecemeal policy change,” Wrightson says.

The National Party signed up to the Labour-government introduced New Zealand Superannuation and Retirement Income Act 2001 in January 2005. However, this accord effectively ended in May 2009 when the then National-led government decided to suspend contributions to the NZ Superannuation Fund, then known as the Cullen Fund.

The commission also wants the government to ban total remuneration policies, under which employers include KiwiSaver contributions in total remuneration, because they undermine the intent of the KiwiSaver scheme.

Wrightson argues that the government could implement these recommendations without any additional government spending simply by targeting government contributions.

The commission estimates the change in parental leave contributions would cost about $34 million in the 2025/26 financial year, extending KiwiSaver to temporary visa holders would cost about $40 million, leaving $471 million out of the allocated subsidies for that year.

“These changes would better reflect the diversity of NZ’s workforce and align KiwiSaver with international best practice,” Wrightson says.

“If no extra funding is available, the recommendations in the 2025 review could be put in place at no additional fiscal cost to the government by reallocating existing spending on the government contribution to where it will have the most impact.”

The Retirement Commission is required to review retirement income policies every three years.

Its report also recommends the development and trial of “sidecar” or emergency savings accounts, noting that they could reduce the need for emergency withdrawals from KiwiSaver by helping members to build liquid reserves as well as long-term investments.

This approach has been trialled in Britain to reduce reliance on high-cost credit for unexpected expenses. “Financial shocks can derail retirement saving and sidecars could help mitigate this risk by giving people access to funds without undermining their long-term goals,” the report says, adding that linking sidecars to KiwiSaver accounts could “leverage existing infrastructure while addressing behavioural barriers to saving.”

Possibly the most controversial recommendation is extending KiwiSaver to temporary migrants.

The commission’s report said this would recognise “the significant economic and social contributions made by migrants, many of whom spend years working and paying taxes in NZ but are unable to access the same retirement savings tools as residents and citizens.”

It noted its research commissioned in 2022 had found that 14%, or 10,000 people, can remain on temporary visas for more than five years and that about 32% of this group transitioned to a permanent visa.

“Extending eligibility could also help NZ be a more attractive destination to the globally mobile labour force and reduce impediments to moving here. With recent changes to increase the period of residency required to be eligible to receive NZ Super, new migrants will face a double barrier if they continue to be excluded from KiwiSaver,” the report said

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