A policy reversal from National has opened a wider debate on retirement savings – and suspicions that old fights over Super eligibility are about to return, writes Catherine McGregor in today’s extract from The Bulletin.
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A demographic reckoning
National’s plan to lift employer KiwiSaver contributions to 6% by 2032 has settled into the political bloodstream, and attention is turning now to what it means for New Zealand’s ageing population. In The Spinoff this morning, Joel MacManus outlines the scale of the shift, encompassing falling fertility rates, rising numbers of retirees and a shrinking share of workers to support them. It’s this imbalance, he argues, that is pushing politicians toward retirement-savings reform – not just in National, but an increasing number of other parties too.
In Stuff, Damien Venuto also frames National’s KiwiSaver policy as a response to the looming demographic crisis, describing it as a policy “built for younger New Zealanders – our kids and our grandkids”. Simplicity founder Sam Stubbs tells Venuto he sees it as a turning point in New Zealand’s economic future. “We will look back on this like the Australians look back on the Paul Keating decision in 1985 and realise, wow, that was one of the smartest things we’ve ever done.”
National’s reversal
One of the subplots of the story has been National’s dramatic 180 on KiwiSaver. After years of cuts to the scheme, the party is now presenting itself as its chief champion. MacManus calls it “the arsonist returning to the blaze”, noting that National has in the past weakened KiwiSaver by cutting minimum employer contributions, halving government contributions and axing the kick-start pay-in. National has – belatedly – come to see the value of incentivising private retirement saving, he writes. “Where previously National was more concerned about the costs to businesses of higher mandatory contributions, it is now worried about the costs to the government.”
Stubbs agrees, calling the policy “a real U-turn for National towards seeing KiwiSaver as being a way for us to save to prosperity”. Now that the party has seized the initiative on retirement saving policy, the ball is “firmly in Labour’s court”.
The reactions roll in
Across the political spectrum, reactions have been broadly positive – but with caveats, reports RNZ’s Russell Palmer. Labour’s Chris Hipkins welcomed the prospect of higher long-term savings but criticised the announcement of a policy without “support for people on low incomes, those not in the workforce, and some protections as well to make sure that employers can’t treat increased KiwiSaver contributions as part of your pay”. The Greens and Te Pāti Māori have emphasised the need for specific policy aimed at low income workers. National’s policy “assumes that everyone is in a position… to be able to save, and that’s just not the reality,” said Debbie Ngarewa-Packer.
Act’s David Seymour said he’d need to see more details, but raised concerns about “how much other saving this [will] displace”. Winston Peters, meanwhile, argued National was merely following NZ First’s combined 20% contribution target laid out in September. “As the saying goes…imitation is the most sincere form of flattery.”
The bigger fight ahead
The debate is already shifting from contribution levels to the deeper architecture of KiwiSaver and superannuation. In Newsroom, retirement commissioner Jane Wrightson warned against “piecemeal policy changes”, saying a cross-party consensus is needed to ensure the retirement saving system remains stable for the long-term.
As Rob Stock notes in The Post (paywalled), National went into the last election saying it would raise the age to 67, starting in 2044. While Christopher Luxon insists the policy is not linked to raising the retirement age, his comment about future generations needing “bigger, deeper KiwiSavers” suggests the idea is percolating in ministers’ minds, even if they have no immediate plans for a change. Economist Shamubeel Eaqub says while he has plenty of issues with our retirement savings regime, he’s delighted to see it return as an election issue. “This is the first election that we’ll be fighting about, how can we make KiwiSaver better. That, in my mind, is undoubtedly extremely positive.”
