Submissions to the 2016 Retirement Income Review

Kaspanz input to the 2016   Commission for Financial Capability, Review of Retirement Income . Kaspanz has been making submissions on each of the monthly review topics, and will continue to do so, as the year progresses.

Three submissions to date have been lodged: the first is shown below, Kiwi Saver will be posted later and submission 3  covers the area of “Who pays for what”

Please if possible don’t use the word ‘decumulation’. Consumers don’t understand it, and it is an instant turn-off

Consumers want some products available at retirement; a mixture or blend of insurance, annuities, and lump sum. We are pleased to see the re-emergence of an annuity based product in recent months–a range of product /tools providing choice for retirees is required, and we note with concern the lack of competition in this area. Perhaps trans-Tasman partnerships could be explored.

Kaspanz notes the different groupings in the retirement income phase, those on low wages 50-65yrs, and the general age groups 60-75 years, 75-85, and the 85 plus group. These are not homogeneous groups, with each having different needs. We note the recommendation of the 2009 Capital Development Task Force on the taxation situation in relation to annuities, and this needs prompt action.

Spending patterns of the retired need more examination, which raises the question of the importance of research. The Retirement Policy Research Centre of the Auckland University Business School plays an important role in this regard, but funding and other resource restraints limit what it can reasonably attempt, and more research is needed. The traditional inheritance approach adopted by parents is rapidly changing; helping siblings/families earlier and in different ways is occurring now and evolving. This adjustment needs to be factored into policy development.

Our members have a feeling of unease in the retirement income sector. Will the money last? Who can we trust? Retirement income is vulnerable to shocks. Political interventions on a regular basis are of concern; many of the Parliamentary groups including the current government appear to promote new policy on a whim or on a poorly researched platform.

Kaspanz notes that in 2015, a number of the Parliamentary parties all proposed significant retirement income policy changes; none were comprehensive, each was somewhat ad hoc, all were less than ideal. Some sort of Parliamentary accord on retirement income, would assist trust and confidence issues.

Alec Waugh: Chairman
Kiwi Saver, Annuities and Superannuation Protection Association NZ Incorporated

Kiwi Saver Providers on Notice. Fees shockwave

The emergence of a new not for profit Kiwi Saver provider , launched by ex-Tower and Westpac executive Sam Stubbs, will shake up the industry, New Zealand is known for its higher than average fee structure compared to other OECD countries, and this addition to the Kiwi Saver Stable of providers can only be good news for Kiwi Saver contributors. With an admin fee of only $30pa and 0.30% a year management fee, this provider scheme appears attractive. Known as Simplicity, and tracking market indices, and using the well-known Vanguard fund management, the provider also has an interesting board including Peter Neilson, Financial Services Council and Kirsty Campbell ex FMA. Research strongly favours tracking marketing indices over active management attempts, and it appears lower remuneration for those involved with this scheme, again can only advantage contributors.


Gender Forum. Inequality problems and outcome’s!

I attended last week, the forum run by the Retirement Policy and Research Centre, Auckland Business School The high cost chromosome-XX retirement: lower pay, less savings, longer lives. As usual the presentations and information provided by speakers was professional and of a high standard.

The topic covered the issue of Gender inequality and the implications and effect upon women. Women are often paid less, often take out from paid work, many policies are built around paid work etc. e.g. Kiwi Saver. In the retirement income area, women live longer; have smaller retirement incomes probably due to a range of discriminatory affects; the evidence is strong that women are disadvantaged.

I felt like I was in a time warp, many of the issues being discussed, were very similar to presentations I had listened to in the 1970-2000 period. The question has to be asked what the policy solutions are and on the presumption they exist, why have they not been implemented. The Ministry of Women have a specific role in this, but how visible, effective are they!

The Ministry for Women is charged with improving outcomes for New Zealand women. A look at their website shows The Chief Executive and the Ministry attempt to achieve this through providing an evidence-backed viewpoint on the critical issues and influencing key policymakers and stakeholders to play their part. The Ministry is primarily a policy agency – it does not provide services directly to the public or act as an advocacy organisation, and it does not have an international development role.

Work is directed towards the Government’s objectives of greater economic independence for women, increasing the number of women in leadership roles, and increased safety from violence for women and girls.  The Ministry brings its unique knowledge and perspective to bear on improving outcomes in these areas, and claims to take a central role in:

  • providing high quality, evidence-based policy advice on issues that affect women and using this to shape policy directions, and influence and gain commitment from Ministers and key agencies to deliver on these policies
  • nominating suitable women for appointment to State sector boards and committees
  • proactively identifying the points of leverage in the system and working in partnership with public, private and community sector agencies to drive improved outcomes for New Zealand women and girls
  • managing New Zealand’s international obligations in relation to the status of women.

How effective have they been? Are they doing gender analysis on pending policy legislation? Do you know who the last Chief Executive was?

Posted by Alec Waugh