Subj : KiwiSaver underperforming compared to Aussie counterpart - report
To   : All
From : News Person
Date : Thu Oct 26 2023 11:34 am

KiwiSaver is underperforming compared to the compulsory Australian Super
system, according to a report released exclusively to 1News.


By comparing KiwiSaver in its second decade with Australia at the same point
in time, the report showed while the number of people signed up to a fund is
similar, the contribution rate is much lower.


Contribution rates are 6% here, compared to 11% across the ditch.


The average balance in KiwiSaver accounts is $28,000 and most members have
stayed with the same fund.


But according to Mercer senior partner David Knox, Kiwis are falling behind,
by squirrelling away less compared to those in Australia.


"I think the current contribution rate is not enough, maximum of 6%, 3%
employer and 3% individual or employee. I'd be looking for a long term rate
of something like 10%, you've got to introduce that gradually," said Knox.


A key difference between the two systems is New Zealand has a global pension,
while Australia's is means tested.


But increasing KiwiSaver contribution rates is still needed to ensure people
have enough for retirement.


The report also stated politicians need to stop meddling with the scheme.


Savers can already withdraw funds to pay for a first home or if they are
facing financial hardship, and now the National Party wants to allow renters
to dip into it to pay bonds.


This is where Knox told 1News a purpose of the system is "essential".


"Once you have that purpose you come back and say `what are we trying to do
here?' if it's for housing, do it somewhere else, not the retirement system."


Seventeen years since Kiwis first started signing up, he thinks education is
still key, so people "understand this is for their retirement".

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