CFFC calls for seven changes to KiwiSaver

In the first part of a two-phase release, the CFFC has recommended a series of immediate changes that Review Manager Scott McMurray believes could make a significant difference to New Zealanders’ balances and retirement outcomes. "They are aimed at making it easier for people to save more for the future and provide greater flexibility and certainty over their retirement savings” he says.

The 7 key recommendations are:

1. Increase employer and employee contributions from 3% to 4%:
2. Automated option to increase member contributions by 0.25%, 0.5 % or 1 % up to a capped maximum rate.
3. Add 6% and 10% to increase the range of employee contribution rates options.
4. KiwiSaver providers to disclose the total dollar cost of all fees on annual statements.
5. Decouple the age of access to KiwiSaver funds from NZ Superannuation
6. Change the name of ‘contributions holiday’ to ‘savings suspension’ and reduce the maximum time to one year.
7. Allow people over 65 years to join KiwiSaver.

On the topic of fees disclosure, CFFC says a dollar fee is easier for most people to understand and would improve transparency and trust. Policy work has already begun on regulations requiring schemes to provide members with actual fees paid in dollar terms which CFFC says will enable easier comparison between different schemes and promote competition.