KiwiSaver changes will change little
The changes to KiwiSaver announced yesterday will do little to address the growing gap in trans-Tasman retirement
savings New Zealanders now face, according to a Victoria University researcher.
Dr Lisa Marriott, Lecturer in Victoria University's School of Accounting and Commercial Law, recently completed a PhD on
retirement savings and taxation, and compared the different policy approaches taken by Australia and New Zealand.
"As I started to compare New Zealand to Australia what I could see was an enormous growing gap in the levels of
retirement savings between individuals in the two countries," says Dr Marriott.
Although both nations were presented with similar demographic projections and the associated economic projections from
an ageing population, New Zealand and Australia have adopted vastly different approaches to retirement savings and its
associated taxation.
"A number of variables influenced the policy decisions each country took, including ideologies about savings and
economic management; power dynamics between individuals and institutions; and the values of equity and efficiency," says
Dr Marriott.
"The implications of these decisions are still valid today, and I think the situation is becoming even more important
because of the time period over which you have to implement these policies; it needs to be driven by a long-term
solution.
"The reality is, as much as we all like to think we are rational individuals, saving for your retirement is difficult.
Do 20-year olds really look forward 45 years and start preparing for that? Up until your mid-40s you have other
financial priorities such as houses, families and children.
"Australia has benefited in a number of ways from their retirement savings schemes. Not only will they have a much
wealthier cohort of retired individuals, which has an economic impact, but they have much stronger capital markets as
well.
"New Zealand cannot ignore the economic impacts likely to result from our retirement savings figures, such as the impact
of reduced consumption on economic growth, and greater reliance on the state in areas such as health and housing."
ends