Comment: Every few months a fresh comparison between KiwiSaver and Australia’s compulsory superannuation scheme, Australian Super, gains traction. It’s often accompanied by the claim that New Zealanders are missing out – bigger balances must mean a better system, right?
The comparison usually focuses on one number: contribution rates. Australia’s compulsory superannuation sits at 12 percent, while KiwiSaver default contributions, up until April 2026, total just 6 percent (3 percent employee, 3 percent employer), gradually increasing to 8 percent by 2028.
But the picture is far more complex than this alone. When we look closely at what sits beneath the Australian system, the comparison becomes much less straightforward.
A point often missing from public discussion is the enormous scale of Australia’s tax breaks for private retirement saving. These incentives are designed to soften the compulsory nature of their system.
The tax breaks currently amount to around 2.0 percent of GDP (around A$60 billion in 2025-26) and are projected to rise to 2.5 percent of GDP by the 2050s, eventually costing more than the means-tested Age Pension itself.
And of course, tax breaks also benefit high earners the most. If New Zealanders want Australian-style personal savings pots, we must be honest about the true fiscal trade-offs.
By contrast, New Zealand’s spending on KiwiSaver subsidies is just 0.3 percent of GDP (before the recent halving of the government contribution). Our net spending on NZ Super is projected to be 5.5 percent of GDP by 2050, still below the OECD average.
It’s also important to recognise that Australians on average earn significantly more than New Zealanders. Higher wages naturally translate to bigger retirement balances, no matter what the policy settings are.
This matters more than many realise. In my conversations with financial mentors working with lower-income families across New Zealand, they consistently tell me that contribution rates are secondary to a more fundamental challenge: there simply isn’t enough income to save from in the first place.
Start your day informed. Make room for newsroom’s top stories. Direct to your inbox daily.
The increase in KiwiSaver hardship withdrawals is the canary in the coal mine.
Other headline figures can be misleading too. The average balance of those nearing retirement in Australia is around $400,000, while New Zealanders aged 61–65 have KiwiSaver balances on average closer to $70,000. This overlooks two important factors.
First, Australia’s compulsory system has been running since 1992; KiwiSaver only began in 2007. We’re comparing over 30 years of accumulation and compounding against fewer than 20.
Second, and more fundamentally, New Zealanders have access to a universal pension. The lifetime income stream from NZ Super, from age 65 to 90, is equivalent to a lump sum of around $560,000 at retirement.
I’ve sat across the table from people who’ve experienced redundancy in their 50s, health crises that forced early retirement, a bad divorce that cleaned them out, or spent decades juggling caregiving responsibilities with part-time work.
For them, the certainty of NZ Super isn’t just policy, it’s the difference between dignity and hardship in later life.
This context matters because New Zealand’s system overall is built on different foundations to our Australian cousins. NZ Super remains simple, fair, universal, and widely trusted. It should be considered a taonga, something worth protecting, not a burden to be reduced. The “affordability crisis” narrative is not supported by independent evidence.
Australia’s means‑tested pension perpetuates inequalities from working life (namely some people, like women, just earn less so their pension is less).
I’ve heard repeatedly from women who took time out for caregiving, Māori and Pacific Peoples facing systemic pay gaps, and people with disabilities, that NZ Super provides certainty, predictability, and dignity. For people who have had interrupted work, lower lifetime earnings, or less capacity to accumulate private savings due to economic life shocks it’s a vital safety net.
Our universal model helps reduce income inequality in retirement and it is this universality that allows KiwiSaver to play a different role to Australian Super.
The recent NZIER analysis conducted to support the Retirement Commission’s 2025 Review of Retirement Income Policies, stressed that both countries’ systems are products of their histories, values, and demographics. Each system needs to be evaluated as a whole, not by plucking out a single feature and declaring a winner.
The grass is not necessarily greener across the Tasman; it’s simply grown under different conditions.
Where to from here?
A critical point is the relationship between private saving settings (like KiwiSaver contribution rates) and NZ Super settings (such as eligibility age). The two should not be considered in isolation but unfortunately both are susceptible to tinkering.
Any changes to NZ Super settings must be accompanied by improvements to KiwiSaver, considering factors such as higher minimum contributions, additional incentives, genuine employer contributions, and better targeting of government contributions.
If we expect future retirees to shoulder more responsibility through private saving, the system needs to ensure they are genuinely able to accumulate enough.
The Government’s Budget 2025 announcement signalling a gradual increase to KiwiSaver contribution rates, starting this April, is a step in the right direction. But higher contributions will only translate to better retirement outcomes if they represent genuine additional saving.
Too many workers discover that their employer contribution isn’t on top of their advertised salary. When employers treat KiwiSaver as cost-neutral by absorbing it into remuneration packages, we’re not building retirement savings, we’re just shuffling existing wages around.
What drives our work at the Retirement Commission is ensuring younger New Zealanders can plan their futures with the same confidence their parents had. When people in their 30s ask ‘will NZ Super still exist?’, we have a trust problem that no amount of tinkering with contribution rates will fix.
I’ve been calling for long‑term cross-party action on retirement income settings to avoid reactive changes that undermine New Zealanders’ confidence in the system. NZ Super must remain fair, stable, and sustainable. KiwiSaver should continue to mature, and contribution settings may well need to rise over time, but these decisions should be coherent, connected, and evidence‑based.
In the 2025 review of Retirement Income Policies, I made 12 recommendations to the Government, including how to tackle the vexed party political issues and achieve consensus, and suggesting targeted policy reforms to address the most pressing gaps.
The message is clear. We need – and deserve – a long-term political accord to focus on providing certainty for future generations of retirees and stop piecemeal policy change.
Higher private savings are part of the picture, but we also have to engage honestly about the fiscal trade-offs, wage realities, and the values that shape our country’s approach. The question isn’t whether Australia saves more. It’s whether New Zealand’s system, taken as a whole, delivers what we need it to: security, equity and sustainability for future generations.