Public confidence in KiwiSaver rests with actions of politicians

Both major political parties have commented recently on their plans to change KiwiSaver after the election. Most of the changes proposed by National came out in the Budget, but now the party has indicated plans to make membership compulsory.

At this stage, Labour has not provided specifics, but a recent media release from David Cunliffe, in response to National’s announcement, advised that Labour has plans to “announce a comprehensive, fully-costed plan to increase our savings”.

In August, the results of a Finsia/Institute of Financial Advisers survey on KiwiSaver showed that more than half of New Zealanders favour compulsory membership for KiwiSaver, although the detail of exactly who it should be compulsory for were not agreed.

However, a more important finding in that study was that concerns related to government involvement in KiwiSaver – particularly with respect to future changes to the scheme – were in the main reasons that New Zealanders had for not joining.

Older New Zealanders remember the short-lived superannuation scheme of the 1970s that was repealed upon a change of government and some are concerned history could repeat itself.

These New Zealanders may not be directly affected but they may be providing advice to their children and grandchildren based on their knowledge of past government behaviour.

More than half of New Zealanders have joined KiwiSaver in its first four years and, according to that same survey, half of the members did not previously have retirement savings.

This indicates that the KiwiSaver scheme is working well, but it is important that the public have confidence that it is not going to change significantly.

Therefore, I would urge the major political parties to ensure that the KiwiSaver scheme does not become a political football with ongoing changes.

The best pledge both National and Labour could give would be to not make any further changes to the KiwiSaver scheme, at least in the short-term.

Dr Claire Matthews is a banking specialist and director of financial planning in the College of Business' School of Economics and Finance.