Let’s please save KiwiSaver from the axe


Dr Susan St John and Claire Dale

The NZ Institute have recently come out swinging the axe for KiwiSaver in a new report that suggests NZ’s rainy day fund could help solve economic pain of Covid-19. The language is somewhat sensationalized, for example, the author of the report is quoted saying:

“How many folk know that the Government still spends about $1 billion a year on KiwiSaver subsidies even though rigorous evaluations of the scheme’s performance found it to be a complete flop?“ 

Without providing any reference for those “rigorous evaluations of the scheme’s performance”, he then goes on to say:

“At the very least, KiwiSaver subsidies are a luxury we can’t afford right now and they should cease.” 

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The report’s author is an ex-Treasury econometrician who has been of part of a group of like-minded economists whose analysis of the available data between 2006-2010 form the basis of at least 6 Treasury papers and articles. The latest, published in the New Zealand Economic Papers in 2017, and also based on data pre 2010 is named “KiwiSaver and the accumulation of net wealth”, 

Using the same limited and out-of-date data sources, two other commentators have also weighed in.  In Rob Stock’s March article, Call to suspend 800 million KiwiSaver subsidies during COVID crisis,  they claim:

“KiwiSaver was always “a solution for a problem which did not exist… Subsidising KiwiSaver was a silly idea at the best of times. It becomes even sillier at the worst of times….What we should be doing is allowing people with KiwiSaver to take out $2000 a month providing they give us a certificate that they have reduced income, or have been laid off because of coronavirus.”

This urge to ensure that the small retirement savings that low income people have accumulated in KiwiSaver are eroded pre-retirement is very strange considering the timing – in early 2020, just as sharemarkets were tanking.  The long-term consequence on the distribution of income for future retirees is ignored. Particularly worrying is the situation of those in their late 50s and early 60s who have lost jobs and are the least likely to be re-employed or to be able to repair their balance sheets.   

Of course, there will be cases where early access to KiwiSaver is justified and sensible, but in a well-functioning society such cases should be rare, even in a crisis. There are other options to drawing on KiwiSaver balances – including better income support in the welfare system, and increasing availability of low- and no-interest loans from not-for-profit microfinance providers. The Commission for Financial Capability’s sorted.org.nz provides online advice, and Financial Mentors offer free services throughout New Zealand. 

The more substantive issue is the animosity to the use of ‘taxpayer’ money to subsidise saving and the implicit idea that KiwiSaver was a mistaken policy that has been proven ‘not to work’. The Treasury-based body of work is entirely founded on the idea that KiwiSaver should be judged on whether it has increased saving. This is too big an issue to cover here but suffice to say it overlooks for example that the form of saving is important too.    

In terms of their own criterion for success, the Treasury-based studies show that about one third of KiwiSaver funds can be attributed to new saving. Disparagingly however, they frame it that only about one third of KiwiSaver funds can be attributed to new saving.”   Leaving aside criticisms of the methodology, this finding scarcely supports the conclusion that KiwiSaver has been “a complete flop”.  Today, one third of the over $57 billion that has been accumulated in KiwiSaver accounts represents a significant gain in individuals’ retirement savings. 

The authors could have more usefully said:

It is amazing that as much as one third of KiwiSaver funds appears to be new saving. There were always going to be offsets especially as many old-fashioned employer-based schemes were either closed, redesigned or switched into KiwiSaver. KiwiSaver means that we have a much more inclusive policy that utilises the advantages of work-based saving while not excluding those not in paid work. Of course, in the early years of KiwiSaver, many people not in paid work joined with the kickstart and may not have made many personal contributions yet. That doesn’t mean in the next 40 years it ‘hasn’t worked’.  We must be very modest about these studies: KiwiSaver only started mid-way through 2007, and any data based on only the very early years can’t realistically be used to judge a long-term savings scheme with a 40-year horizon.”



  1. My first question was “Who the f… are the NZ Institute?
    I did a bit of searching and found out that their correct name is the NZ Initiative.
    When I read about their people on their website I discovered what I already figured: a bunch of high-earning execs, directors and Milton Fried economists all drooling at the prospect of many billions of dollars of locked Kiwisaver funds coming their way.
    These people live in the land of privilege and plenty, what the hell do they know about life in the real world?
    One of the main purposes of Kiwisaver was to encourage people to save for their retirement so they would be less dependant on the state when they did retire – was it not?
    The National government fiddled with it so it has become really just another savings scheme, albeit with a few advantages. It shouldn’t be tampered with any more.

    • Yes and the NZ Initiative is none other than the rebranded Business Roundtable, – the same louts who were the major ideological drivers behind Rogernomics – aka through the London based Mont Pelerin society – to which Milton Friedman was not only a founding member but a free market evangelist for the neo liberal movement. To which both Roger Douglas and Ruth Richardson were active board members of the Mont Pelerin society.

      More here.

      Who are the New Right? – New Right Fight

      • Who’s the German dude in charge?
        Why is a German dude running the New Zealand Institute?
        Is this a FFS-forehead- head-slap moment?
        Would this be like John Palino and Luigi Wewege running the Auckland Council as mayor and mayor’s henchman?
        Who pays for the light bulbs, wages, fax machine and suits at the NZ Institute?
        Follow the money and the influencers? Did you know that effluent and influencers have no acronymic correlation?
        How does one access the tax records and funding of the New Zealand Institute Nicky Hager?
        Who pays Mr Zippy and the taxpayers coalition?
        How does one access the tax records and funding of the Taxpayers Coalition Nicky Hager?
        I need a new book to read just before the election Nicky?
        Probably enough for a couple of books, or a book and a sequel, or a sequel and a prequel Nicky?
        Follow the money and the influencers? Did you know that Zippy and Williams have no acronymic correlation?
        So many questions, so little time before the election, but there’s got to be a whiff, a National Party dirty politics mephitis.

      • The rebranded Business Roundtable?
        I knew it!
        I knew there was something familiar about those names, but couldn’t pin it down.
        Funny how first impressions are usually right, eh?

  2. “a solution for a problem which did not exist… bullshit.. Retirement savings is a massive problem in NZ and how can people afford to save in low wage AO? Smells like neo liberal whinging. Stuff em’.
    I like the fact business have to contribute into an individuals slush fund, although not in kiwisaver myself and missing out on free money (wifes in it), I choose to put my retirement fund into planted managed trees now 20yrs young. I trust my luck with the trees rather than any and all treacherous bloody gummint. Govt guarantee means f-all.

  3. Kiwi Saver is by no means a flop. Indeed you need look no further than the economic and social success Australia’s compulsory super has been to see that. Indeed its an example we should better emulate. If people know they have a nest egg for their latter years its more likely they will inject money back into the economy which is what has happened in OZ. Possibly a little too much spending there but still its a great scheme with positive outcomes.

  4. Didn’t Muldoon scrap the Labour instigated superann scheme and pocketed all the money into the consolidated fund?
    These clowns seem to be advocating something similar. But this time the money belongs to those in the sceme not the government.
    So if these guys are ‘treasury’ advisors god help us all.

    • Was not in the country at the time Iainz, but from memory muldoon described it as a semi communist scheme? Anti commie all the rage at the time. Muldoon offered the good bergers of nzild all there money (or a large part of it) if back if they voted him in.
      True to form and in there usual forward thinking fashion the nzilders proceeded to do so. Had that scheme continued, i believe NZ would be a much wealthier country today.

      • Of course!

        Money in bank, money in pocket, discretionary spending keeps the money go round happening. Less stress on retirement spending, more independence for the elderly, – you know you get the feeling that certain elements didn’t want a comfortable elderly population because it meant less money for them… and made it harder to privatize anything that wasn’t nailed down..

    • Muldoon got in with massive backing from CIA (Hanna-Barbera) running the communist scare of a superannuation system where individuals contributed to their accounts held by the NZ govt so guaranteed.
      The last thing banks wanted to see was people investing in their country. In a matter of months the govt had accumulated substantial capital held by citizens and it was obvious that Govt borrowing would be a thing of the past.
      A whole new framework where citizens owned the show not private off shore banks, If that excellent scheme had continued then NZ would have been well heeled and capable of lending for profit to other states.

      But the yanks were not going to have that so McCarthy was dragged out of the cupboard and the Cossacks danced on the TV screen accompanied with lies and scare tactics.

      Cullen was “allowed” to bring in Kiwi Saver as Kiwis money was given to private fund managers to play with and charge “management fees” for the privilege. . When the gambling is over and the coming financial crash comes then Kiwis Saver’s money will be gone.
      A rort disguised.

      Kirk’s scheme was govt backed.
      Kiwisaver is not and the money contributed by the govt is given to fund managers to gamble with.

      There should be a Kiwi Saver fund owned and run by the NZ govt with guaranteed backing.

  5. If taking on debt to afford the $500 tax credit is getting in the way of better income support to those in need (the people who cannot afford to open a Kiwi Saver account because there is nothing after rent, power and food), then its middle class welfare we cannot afford.

    The better option is to supplant the tax credit to afford improving income support.

    The weakness in Kiwi Saver at the moment is amongst those unable to afford it (barley covering rent, power and food) – its about time to bring in a compulsory employer contribution to those lower income employees – maybe 1.5% half that required for employyees who are saving.

    Offering tax credits and employer contributions to only those who cannot afford to save is not just. It’s middle class privilege. A bit like super to those with the income, health and housing to live that long.

    • Offering tax credits and employer contributions to only those who CAN afford to save is not just.

  6. Those kiddies must stop raiding the piggy-bank just because they are short of funds till the sharemarket coughs.
    They don’t realise what the solution is, because you don’t query the people involved in, or causing, a crisis, whatever it is. Because – always someone else should do something uncomfortable to solve it.

    In this case the best feature would be to stop commissioning the sods for dinky reports with coloured lines on them that can be reformulated at a moment’s notice. They just take the ones prevailing when asked to look at the problem, and turn them round the other way. Suddenly everything is going up and rosy. Hey presto they say we made your troubles go away. Or of course, the stance for the agile – stand on your head!

  7. ” KiwiSaver was always “a solution for a problem which did not exist… Subsidising KiwiSaver was a silly idea at the best of times ”
    Yeah these well off scumbags would say that it is the accepted neo liberal narrative that profits before people is the overriding concern.

    • its not subsidized the tax coming off the employer contribution is greater that the tax credit the best thing we can do is get the fees down fees are important sorry i like kiwisaver we should had it 50 years ago we did naxt fucked it up as they always do

  8. The government changing the rules all the time its all going too disappear b4 we no it.. Been a cash cow for some fleas too invest and abuse our money and adventully lose it..

  9. Remember the norm Kirk super scheme with dollar for dollar employee/employer/govt imput, govt controlled (a la nz super fund) govt gauranteed that could have ensured our future but was stolen by Robbie in an election bribe by a sick national party that is trying to be repeated now by a sick national party. Workers, wake up take control of your party, don’t let the greens in as they are the fanatical middle class hippies that have never done a day work. Vote labour and get them in by themselves or with Winston so we can have some pay rises and wealth redistribution. Remember that all wealth is generated from land and or labour.

  10. I’m 30 and think Kiwisaver is a great initiative. Hearing how much superannuation costs each year I have a strong suspicion it’s either gone completely or pushed back 5-10 years by the time I go to retire and without Kiwisaver I wouldn’t have a cent saved or even thought about retirement yet. Same for my husband!

  11. My daughter has a Kiwi saver account in which she has accumulated tens of thousands of dollars which she otherwise would not have saved.

    Originally the govt contributed a greater share but this was whittled away by the Key Regime. Labour need to put that right. The higher the subsidy the greater incentive there is for workers to save to gain the subsidy. Its a perfect election bribe for Labour.

  12. It’s a human right to be able to lead a dignified and secure life when you are no longer able to work, but successive governments have refused to set universal superannuation at a level that allows this. They pay a propagandist called “the retirement commissioner” a six figure salary to drum away at the message that we must provide for ourselves, and thoughtfully provide the vehicle, KiwiSaver.

    In good faith, many workers try to build up their KiwiSaver account, often at considerable sacrifice. Many were dismayed when the recent Stockmarket slump shaved thousands off their fund. A workmate of mine, who was very proud of her balance, said quite accurately, “They’ve stolen my hard-earned money.”

    Don’t worry , we are told, the markets will recover. Well, maybe, maybe not. But no one asks the basic question, “ Why should our retirement security depend on the vagaries of their markets in the first place?”

    What the ideologues at the NZ Institute ignore, or cover up, is that all pensions are not a grant, but an entitlement. They are just deferred earnings, part of the value that workers create through their labour, that the state or the employer holds back to – perhaps- pay out later. That’s also why it’s a lie to say that superannuation will be a burden on future generations. We have already paid for it. As Marx said, “Each generation pays for its own wars.”

  13. I nats get back in, look out kiwisave, and kiwibank and kiwirail and kiwianything.
    Brierly’s ( whatever happened to him?) asset stripping will be minor compared to Muller’s asset sales.

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