The Big Picture
The Big Picture
Work and the workforce
Who gets what? Who pays?
Making your money stretch
New Zealanders have until Thursday, October 31, to have their say on the 2019 Review of Retirement Income Policies.
Public submissions on the Review's terms of reference close at 5pm that day.
A wide range of views and ideas have been submitted so far. Some examples are listed below:
Should KiwiSaver be compulsory and what would that look like in practice?
For low-income workers who are struggling to get by, it’s hard to expect them to make KiwiSaver contributions. On the other hand, we know that having KiwiSaver will prepare them for a more comfortable retirement. The question is to what extent should people be obligated to contribute to their retirement savings.
“I work with many housekeepers and hospitality workers, doing similar work to those in the rest homes. These industries would not survive without these hard working people putting up with low incomes. They do not have the disposable income to put money away for medical insurance, let alone save for a retirement nest egg.”
Other ideas for KiwiSaver:
* Remove the opt-out-of-KiwiSaver option, keep all employees enrolled in KiwiSaver and require that they make the minimum 3% salary contribution to their KiwiSaver account.
* The government and/or the employer should have to contribute to an employee’s KiwiSaver, even if they’re not making contributions themselves.
* Bring back the $1000 kickstart for people newly enrolled in KiwiSaver - it’s a strong incentive to get started.
* Increase employer contributions from 3% to keep up with employee contributions, eg, if an employee contributes 10% of their salary into their KiwiSaver account, the employer should match it – this is not currently mandatory.
“My rationale is the more an employee saves the more likely they will have greater income in retirement. Employers need to play a role in contributing to an employee's retirement. Most employees are more than likely to increase their contribution if their employer is going to contribute equally.”
Are people aware of the fees they’re paying for their KiwiSaver investment?
While some haven’t looked at the fees they’re paying, those who have looked have different opinions on their significance:
* Fees are to be expected and it’s part and parcel of any investment.
“Fees are ok as the bank is doing some work to invest your money.”
* Fees are associated with return on investment – if you’re paying higher fees, you can expect higher returns.
“I actively sought out a provider with the best combination of returns and fees."
* Fees should be more transparent to the consumer.
“I’d prefer a breakdown of my fees and an explanation of why I’m being charged."
* Fees are too high and should be regulated by government.
“There needs to be government regulation on fees for what is a monopoly scheme that people don't have any real choice about."
There are similar sentiments around transparency and regulation when it comes to ethical investment.
“It’s really hard to find out what you are investing in.”
“[Ethical investment] is a growing trend which is being demanded by investors. It will happen because the demand is there”.
With levels of self-employment increasing, including contracting, who will make those workers' employer contributions?
Some say it is unfair that self-employed people don't receive employer contributions to their KiwiSaver, and the government should step in with an alternative:
“I’m a contractor and I don’t currently contribute more than the minimum… although I am committed to having retirement savings and my own home debt free by the age of 65.”
“I picked up a part time job. At first I was going to get paid as a salary worker but once I got the job I had to invoice as a contractor and missed out on the retirement scheme”.
However, others say it's the responsibility of self-employed people to prepare for their retirement because they’ve made the choice to work for themselves.
What is the purpose of NZ Superannuation?
Submitters generally agree that the purpose of NZ Super is to provide a basic standard of living.
Some go further and talk about it providing dignity for the elderly, preventing poverty, supporting those who have retired from work, providing a living wage, and Super being a reward for working hard and paying taxes.
Making our savings stretch through retirement
Most submitters think there needs to be more help for those wanting to make their KiwiSaver and other savings stretch through their retirement.
Many have stressed the importance of financial education before retirement so people don’t splurge when they stop paid work.
What do you think?
Don't miss the chance to have your say.