Home > Social Issues, The Body Politic > National guts Kiwisaver

National guts Kiwisaver

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Released today at the National Party annual conference in nelson;

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National tackles first home affordability

Source: NZ Herald – National tackles first home affordability

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Kiwisaver was set up in July 2007 by Labour Finance Minister, Michael Cullen, to motivate New Zealanders to save for their retirement. Our Aussie cuzzies already have about A$1.3 trillion saved in their compulsory super schemes – we are lagging way behind.

“After more than a decade of compulsory contributions, Australian workers have over $1.28 trillion in superannuation assets. Australians now have more money invested in managed funds per capita than any other economy.” Source

A similar scheme, implemented by the Norman Kirk-led Labour government in 1973, was scrapped by National’s then-Prime minister, Robert Muldoon, in 1975. National has a horrendous track record when it comes to planning and motivating New Zealanders to save for retirement.

Instead of saving for retirement, we tend to invest in “bricks and mortar” – rental properties. This is not saving as it relies heavily on borrowing from overseas lenders to finance. Those borrowings are other peoples’ savings.

So in effect we are borrowing other peoples’ savings to invest in rental properties which we are using for our retirement “savings” – other peoples’ savings being used to build up our own “savings”.

This is not just “false wealth” and damaging to our economy (those borrowings have to be re-paid eventually) – it is sheer economic lunacy on a grand scale. Note the green line in the chart below – it is private debt incurred from overseas;

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Source

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And the National Party turns a blind eye to it.

As a result, our savings is meagre enough as it is.

The ANZ and ASB summed it up with brutal reality,

ASB’s executive general manager wealth and insurance Blair Turnball said someone who wanted to live off $40,000 a year needed to retire with a pool of around $600,000 if they wanted to make it last for 25 years – the timeframe in which people felt they could live beyond the retirement age.

“This [$70,000] is $530,000 less than the average respondent in our survey aspired to, and only 55 per cent of the aspiration annual $40,000 income. It is alarming how big the gap is.”

Source: NZ Herald – Kiwis ‘not saving enough to retire on’

John Body, managing director ANZ Wealth and Private Banking New Zealand, said New Zealanders were saving around 2 to 3 per cent of their take-home pay whereas Australians were saving 9 per cent and many in Asia were saving 12 per cent.

“We are just not saving enough.”

Source: IBID

For Key and his incompetant  government to allow New Zealanders to tap into their Kiwisaver funds undermines the very purpose for it. In fact, he’s made the situation, as outlined by the ANZ and ASB, even worse.

We’re back to square one; people investing in bricks and mortar instead of saving for their retirement.

There are other ways to get Kiwis into their first homes without subverting Kiwisaver. National apparently chooses not to consider any of them.

In July 2008, Key made this public pledge,

“There won’t be radical changes. There will be some modest changes to KiwiSaver.”

Source: NBR –  Key signals ‘modest changes’ to KiwiSaver

This most certainly constitutes a radical departure from Kiwisaver’s original intent.

Allowing people to withdraw from their Kiwisaver savings account to invest in housing may work for the very short term; Key has “solved” a potential election nightmare for himself and his Party.

But for the future of this country, and the hundreds of thousands of baby-boomers soon to hit retirement – he has left us a ticking time-bomb.

Political expediency wins out again.

This blogpost was first published on The Daily Blog on 12 August 2013.

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= fs =

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  1. doug
    13 August 2013 at 8:37 am

    The irony is that the move shifts diversified saving BACK into housing.
    That is what we have be warned is very bad for the last several years.

  2. Deborah Kean
    14 August 2013 at 4:00 pm

    Of course that leaves out the people who, for whatever reason willl never own a house. (In my case when I was married to a waster, munter and all round deadbeat, I watched him drink what could have been a house for us, then spent most of the next 25 years on DPB – now it’s too late for house buying.) My sympathy is for my kids – children of Rogergnomics, as a book I am reading calls them.
    Deb

  1. 13 December 2013 at 1:56 pm
  2. 1 June 2015 at 8:00 am

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