Power, a former National MP for 12 years and former Minister of Justice and Commerce, Consumer Affairs, said over the past 12 months, commentators have drawn to the attention of policymakers that the current settings are not sustainable \u2013 it hasn\u2019t just been industry and the Retirement Commissioner.<\/p>\n
\u201cAny change sits with the policymakers, not industry. There\u2019s been a series of suggestions and solutions put forward but, for whatever reason, progress hasn\u2019t been speedy in the last 12 months.\u201d<\/p>\n
Last year Power told Mood of the Boardroom that KiwiSaver schemes and the NZ Super Fund have reached a scale where they can play a larger role in smoothing out the cost of superannuation.<\/p>\n
\u201cWe need to have a tripartite discussion on what retirement savings will look like. The construction of the conversation has changed because of the size of the funds,\u201d he said at the time.<\/p>\n
The NZ Super Fund has gone over $80 billion in value, and the 38 KiwiSaver schemes, with a total of 3.33 million members, had $128.6b under management at March 31 this year. The KiwiSaver assets had an annual increase of 11.5%.<\/p>\n
Power backed the move in the May Budget to increase the employer contribution to KiwiSaver from 3% to 4% over two years, starting from April next year.<\/p>\n
\u201cThat was a good start and has to be applauded. But why stop there? We need to paint a picture, and the need for a 10-year view is incredibly important. We don\u2019t have to copy Australia, which increased the employer contribution to 12% in July, and their government superannuation (called Age Pension) is means-tested and available from the age of 67.<\/p>\n
\u201cWe are 15 years behind them,\u201d said Power. \u201cWhat the Government did in the Budget was a powerful tool to encourage a deeper conversation about retirement savings and not to be nervous about recognising that the New Zealand public is really smart and understands the nuance of long-term policymaking if they are taken on that journey.\u201d<\/p>\n
Power said there has been an emergence of thoughtful, bipartisan arrangements with infrastructure. The same approach should apply to superannuation and long-term retirement savings.<\/p>\n
\u201cForming accords and committees is not the first step. The first step to bipartisan policy making is getting key figures across Parliament to trust the association.\u201d<\/p>\n
Power said his firm has seen a 40% increase in communications from clients concerning significant financial hardship. According to IRD, there were 4100 withdrawals from KiwiSaver in July last year. This increased to 4950 in July this year.<\/p>\n
\u201cI checked with my team and we are not seeing this trend ease off at the moment. What it\u2019s telling us is that working mums and dads are applying for withdrawals. They are not large sums of money, just hundreds of dollars to cover week-to-week or fortnight-to-fortnight living expenses.<\/p>\n
\u201cThis is a leading indicator of how the economy is sitting. Long-serving staff haven\u2019t seen it like this before. It\u2019s really about household expenditure pressure,\u201d he said.<\/p>\n
\u201cOne that sticks out is the increase in power. Because it\u2019s a complex industry, the reasons for the increases are quite challenging to convey. This is an opportunity for the policymakers to talk about the components that make up the electricity price and make sure the pricing is widely understood.\u201d<\/p>\n
Power said while the Government was considering a variety of reports on the energy market, it would be helpful to get visibility on what these reports recommend and to engage in a conversation.<\/p>\n
\u201cWhen you think about the sums of money involved with KiwiSaver, the increase in living expenses applications is not having a huge impact on the overall numbers,\u201d he said.<\/p>\n
The average KiwiSaver balance among New Zealanders is $37,000, a slight increase of $5000 from last year.<\/p>\n
\u201cMy main concern is to get the balances up for people heading into retirement. It does worry me that the year-on-year balance is increasing $5000.\u201d<\/p>\n
Power suggests that the employer contribution to KiwiSaver should increase up to 9% or 10% over a period of 10 to 15 years. \u201cMy point is, we need to have a plan beyond two years. Retirement savings is not straightforward but we need to have a debate.\u201d<\/p>\n
Fisher Funds is an advertising sponsor of the Herald\u2019s Mood of the Boardroom report.<\/p>\n","protected":false},"excerpt":{"rendered":"Power, a former National MP for 12 years and former Minister of Justice and Commerce, Consumer Affairs, said…\n","protected":false},"author":2,"featured_media":39670,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[23607,36086,36087,11231,138,115,3937,36088,8473,84,3938,246,36090,2082,36091,305,5511,27878,130,36089,5971,111,139,69,1118,244,245,28062,10112,16860,294,4578,312,6037,314,199,223,8229,61,102],"class_list":["post-39669","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-approach","tag-boardroom","tag-bolder","tag-boost","tag-business","tag-calls","tag-chief","tag-courageous","tag-done","tag-education","tag-executive","tag-finance","tag-fisher","tag-for","tag-funds","tag-have","tag-just","tag-mood","tag-more","tag-ncea","tag-need","tag-new-zealand","tag-newzealand","tag-nz","tag-of","tag-personal-finance","tag-personalfinance","tag-policymakers","tag-power","tag-reform","tag-retirement","tag-savings","tag-says","tag-simon","tag-superannuation","tag-take","tag-the","tag-they","tag-to","tag-with"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/39669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=39669"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/39669\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/39670"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=39669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=39669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=39669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}