So, how exactly might a compulsory KiwiSaver help? What is the problem that compulsion might solve? Hong doesn’t explain but then, neither does National so he’s in good company.
We know that our population is ageing and that New Zealand Superannuation (NZS) is becoming more expensive.
Not too expensive, according to the Treasury’s projections, compared with what other OECD countries are paying today.
Today, we pay a net 4.5% of GDP; in 40 years’ time, that will be an estimated 6.6%. The OECD average is currently 7.4%.
Adding compulsory KiwiSaver to that will actually make things worse, if that’s the only change.
NZS will cost the same and, on top of that, savers will be cashing in KiwiSaver and converting those into extra claims on tomorrow’s economy to pay for their groceries.
The total economic cost of an ageing population will actually be higher with compulsion. That assumes, of course, that compulsion will lead to higher savings. That isn’t a given as citizens will adjust their “other” behaviour to compensate.
If we were really worried about the future cost of our ageing population, compulsion would make sense only if NZS becomes means-tested, as is the Age Pension in Australia.
And that would have to be accompanied by intrusive income and asset tests and a large bureaucracy to enforce the rules.
I wonder if Hong has thought about that. He doesn’t say so but it’s an important detail if compulsion is to make economic sense.
Hong probably argues that New Zealanders don’t save enough. But where is his evidence? We do have less saved in superannuation accounts than in Australia but that is a small component of our own households’ total savings.
Michael Littlewood, a retirement policy expert.
New Zealand has very poor data on what households do with their money.
StatsNZ publishes a regular summary of all households’ assets (top-down) but that gives us only a hazy view.
The last time I looked at those numbers (as of December 2023), “financial assets” were 52.5% of all households’ net household wealth (including KiwiSaver which was just 3.9% of net wealth).
As an aside, net owner-occupied housing was 34.8% of all net wealth. That’s less than many might expect.
However, those numbers tell us nothing about the distribution of wealth, including financial assets so no one can say that New Zealanders aren’t saving enough.
Stats NZ looked at this issue 20 years ago in the Survey of Family Income and Employment (SoFIE), a longitudinal study of a large sample of households between 2002 and 2010.
We discovered that New Zealanders may have been over-saving for retirement (based on a bunch of relatively conservative assumptions).
That surprised many, especially as that was before KiwiSaver started in 2007. KiwiSaver seems to have been the “answer” to a non-existent problem.
The UBS Global Wealth Report 2026 shows the average wealth per adult in New Zealand was about US$450,000 at the end of 2025.
That’s eighth on the list of the top 30 countries measured in the report (Australia is fifth and Singapore sixth).
Average wealth is one thing but median wealth matters more.
That’s what is owned by the notional adult in the middle of the total population (50% above and 50% below).
According to UBS, the median wealth in New Zealand at the end of 2025 was US$207,000 – fourth on the list of the top 30 countries; Australia was third and Singapore 20th.
Those numbers say nothing about distributions around the median but the median New Zealander seems to be in a reasonable position, comparatively.
These surveys shouldn’t be examined too closely but they are the best we have. How different are we really from the countries that Hong compares us with? How will building a “savings culture” change things? Do they need to change?
National (and New Zealand First) have both declared their support for compulsory KiwiSaver.
That doesn’t mean compulsion has to happen if the present coalition is returned in November. Let’s hope that, once the electoral dust has settled, we have a research-led debate about what’s best for New Zealand, not just on KiwiSaver but also on NZS itself and the wider retirement system’s settings.
And can we please stop doing surveys that ask people what they think about compulsion?
In 1996, 68% of New Zealanders thought it was a good idea but, in 1997 when they saw what compulsion meant (8% of pay and no real gain in their future retirement incomes), they decided “no” by a margin of 92% to 8%.
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