{"id":830758,"date":"2026-07-29T07:23:21","date_gmt":"2026-07-29T07:23:21","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/830758\/"},"modified":"2026-07-29T07:23:21","modified_gmt":"2026-07-29T07:23:21","slug":"compulsory-kiwisaver-wont-fix-retirement-costs-michael-littlewood","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/830758\/","title":{"rendered":"Compulsory KiwiSaver won\u2019t fix retirement costs – Michael Littlewood"},"content":{"rendered":"

So, how exactly might a compulsory KiwiSaver<\/a> help? What is the problem that compulsion might solve? Hong doesn\u2019t explain but then, neither does National so he\u2019s in good company.<\/p>\n

We know that our population is ageing and that New Zealand Superannuation (NZS)<\/a> is becoming more expensive. <\/p>\n

Not too expensive, according to the Treasury\u2019s projections, compared with what other OECD countries are paying today. <\/p>\n

Today, we pay a net 4.5% of GDP; in 40 years\u2019 time, that will be an estimated 6.6%. The OECD average is currently 7.4%.<\/p>\n

Adding compulsory KiwiSaver to that will actually make things worse, if that\u2019s the only change. <\/p>\n

NZS will cost the same and, on top of that, savers will be cashing in KiwiSaver and converting those into extra claims on tomorrow\u2019s economy to pay for their groceries. <\/p>\n

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\u2019t a given as citizens will adjust their \u201cother\u201d behaviour to compensate.<\/p>\n

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. <\/p>\n

And that would have to be accompanied by intrusive income and asset tests and a large bureaucracy to enforce the rules.<\/p>\n

I wonder if Hong has thought about that. He doesn\u2019t say so but it\u2019s an important detail if compulsion is to make economic sense.<\/p>\n

Hong probably argues that New Zealanders don\u2019t 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\u2019 total savings.<\/p>\n

\"MichaelMichael Littlewood, a retirement policy expert. <\/p>\n

New Zealand has very poor data on what households do with their money. <\/p>\n

StatsNZ publishes a regular summary of all households\u2019 assets (top-down) but that gives us only a hazy view. <\/p>\n

The last time I looked at those numbers (as of December 2023), \u201cfinancial assets\u201d were 52.5% of all households\u2019 net household wealth (including KiwiSaver which was just 3.9% of net wealth).<\/p>\n

As an aside, net owner-occupied housing was 34.8% of all net wealth. That\u2019s less than many might expect.<\/p>\n

However, those numbers tell us nothing about the distribution of wealth, including financial assets so no one can say that New Zealanders aren\u2019t saving enough.<\/p>\n

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. <\/p>\n

We discovered that New Zealanders may have been over-saving for retirement (based on a bunch of relatively conservative assumptions). <\/p>\n

That surprised many, especially as that was before KiwiSaver started in 2007. KiwiSaver seems to have been the \u201canswer\u201d to a non-existent problem.<\/p>\n

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. <\/p>\n

That\u2019s eighth on the list of the top 30 countries measured in the report (Australia is fifth and Singapore sixth).<\/p>\n

Average wealth is one thing but median wealth matters more. <\/p>\n

That\u2019s what is owned by the notional adult in the middle of the total population (50% above and 50% below). <\/p>\n

According to UBS, the median wealth in New Zealand at the end of 2025 was US$207,000 \u2013 fourth on the list of the top 30 countries; Australia was third and Singapore 20th. <\/p>\n

Those numbers say nothing about distributions around the median but the median New Zealander seems to be in a reasonable position, comparatively.<\/p>\n

These surveys shouldn\u2019t 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 \u201csavings culture\u201d change things? Do they need to change?<\/p>\n

National (and New Zealand First) have both declared their support for compulsory KiwiSaver. <\/p>\n

That doesn\u2019t mean compulsion has to happen if the present coalition is returned in November. Let\u2019s hope that, once the electoral dust has settled, we have a research-led debate about what\u2019s best for New Zealand, not just on KiwiSaver but also on NZS itself and the wider retirement system\u2019s settings.<\/p>\n

And can we please stop doing surveys that ask people what they think about compulsion? <\/p>\n

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 \u201cno\u201d by a margin of 92% to 8%.<\/p>\n

Catch up on the debates that dominated the week by signing up to our Opinion newsletter<\/a> \u2013 a weekly round-up of our best commentary.<\/p>\n","protected":false},"excerpt":{"rendered":"So, how exactly might a compulsory KiwiSaver help? What is the problem that compulsion might solve? Hong doesn\u2019t…\n","protected":false},"author":2,"featured_media":830759,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,25055,99,403736,32445,2331,253103,186,11506,1899,149741,64404,43920,403737,403739,19927,34827,403740,104820,184,185,1793,1781,9501,403738,24080,193,316,206073,145884,22671],"class_list":["post-830758","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-au","tag-australia","tag-build","tag-business","tag-compulsory","tag-costs","tag-culture","tag-explain","tag-finance","tag-fix","tag-have","tag-hong","tag-kiwisaver","tag-leonard","tag-littlewood","tag-logical","tag-michael","tag-most","tag-neglects","tag-path","tag-personal-finance","tag-personalfinance","tag-retirement","tag-savings","tag-that","tag-thinks","tag-today","tag-wealth","tag-what","tag-wont","tag-wrong","tag-zealands"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/830758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=830758"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/830758\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/830759"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=830758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=830758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=830758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}