Monthly Archives: August 2019

Kaspanz submission to the 2019 Retirement Income Review

SUBMISSION FOR THE 2019 REVIEW (Kiwi Saver, Annuities, New Zealand Superannuation Protection Society Incorporated) is New Zealand’s only Consumer group with a focus on retirement income issues, formally incorporated since 2013, with an active website, updated weekly.

Kaspanz notes the announcement of the 2019 review and makes the following comments, all fundamental to a sound review and a caring society


The twin retirement income models are world -leaders, and New Zealand should be acknowledging this fact. The model is beneficial to women (not linked to employment salary scales) and being universal has kept the elderly from poverty, also the low economic group with an income guarantee from 65 years of age. The universality has had a calming effect on the inherent tensions between the wealthy, educated and those with choice, and the large population group with very limited savings potential.

Most OECD countries admire our schemes, the simplicity and universality, with New Zealand Superannuation being different to most others, being taxed at source, but with overall costs significantly lower than most OECD countries.

New Zealand is seen as the smart country in relationship to its Retirement income models, this requires endorsement and reinforcement. No major change is required; when adjustments are required they should be incorporated within the existing model, with no significant change needed.

Means testing is a discredited option, its costs and implementation significant, and advocates never mention the elephant in the room issue, of how the educated camouflage income, using trusts and similar to avoid means testing regimes. If you want to advocate means testing, you must also advocate all trusts and asset protection schemes are dismantled and all income is transparent.

Kaspanz suggests be very wary of single issue commentators and those attempting to forecast the future, the assumptions are frequently invalid, significantly erroneous, and don’t take into account the adjustment all societies make over time.

In simple terms, no alternative to the current NZ Superannuation and Kiwi Saver models has emerged, it’s time we acknowledge the substance of our schemes, and cement them in place for the next 50 years plus.


Kaspanz as the consumer voice, also states that New Zealanders want consistency on retirement income issues, long lead in times for changes, (so financial adjustments can be made and understanding of why adjustments are made, and understood).

Substantial change should be signalled 15-20 years in advance, there is nothing worse than announced changes, occurring within a short time period. The political party that understands these principles and acts accordingly will benefit at the electoral polls.


Kaspanz also is committed to comparative analysis, what is happening world-wide and what implications that has for New Zealand. In a similar manner what is the academic and research saying on trends over time, affecting the key retirement policy issues.

THE FINANCIAL LITERACY COMMISSION should focus on Retirement Income issues. Engage in research both contracted and internal, and should also be the source of authoritative analysis on Retirement Income issues. A hub of research including contacted work on topics is required.

Kaspanz is concerned that the focus on Financial Literacy while having merit in the intention requires too much implementation resource, to have any meaningful affect, and has left the Commission a limp reflection of what it could have been. The twice re branding of the Commission name has been a failure marginalising the Commission into a meaningless entity; New Zealanders have no awareness of the Financial Literacy Commission name or role.

Kaspanz remains concerned that many self-styled commentators on retirement income issues appear to have little historical analysis of the issue at question, or what the current research is saying.

For example while increasing longevity cannot be ignored, it’s “the quality of life “and associated health issues that an individual of senior years is faced with that is of primary importance, rather than the individual might live a couple of years longer each decade. In a similar manner the element of employment opportunity after 60 years is still primarily very limited, and is unlikely to change. Realistic options exist only for the educated and wealthy, the hurdle of perception and bias entrenched into the system compounds the limited options for most, the reality for the majority of the population post 60 years still remains limited work options and declining age, body and mind challenges.

We  notes that  40% plus of current NZ seniors only have New Zealand Superannuation as their income source, and that is  unlikely to change over the generations.!  Note the Australian system with its compulsion, has not affected the number of Australian citizens requiring some sort of Government support or pension! This fact is a baseline issue for any policy changes contemplated


The issue of Annuities often a combination of Insurance and managed funds, requires attention, a Government interested in community well- being should consider its involvement in annuity/ Insurance issues (decumulation).


The issue of fees re Kiwi Saver Funds and similar pension products, in New Zealand has been one of price gouging and outrageous fees, masked by the Industry for years. This state of affairs has gone on for too long, and requires Government attention.


Kaspanz notes there has been no Commission, Task Force or similar on Retirement Income since 1991, such a body would provide a baseline of information and substance for both industry and political decisions.


This submission having made comment on key retirement income issues now makes specific comment on the terms of Reference

Terms of reference for the 2019 retirement income policy review

Aspects of retirement income policies the review must address and the topics to be discussed in the Retirement Commissioner’s 2019 report:

  • An assessment of the effectiveness of current retirement policies for financially vulnerable and low-income groups, and recommendations for any policies that could improve their retirement outcomes.

COMMENT:  The twin Model of NZ Super and Kiwi Saver is a world leader. Its universality and payment to the individual is excellent for women (not dependant on paid work), and universality has a re-assuring affect, reducing the tensions within communities.


  • An update and commentary on the developments and emerging trends in retirement income policy since the 2016 review, both within New Zealand and internationally


The” Golden “age of inheritance is upon us. The transfer of wealth from one generation to another has been a phenomenon over centuries, and the current trend suggests another one has arrived. Research is suggesting grandparents are paying the fees for education, a dominant cost saver for the young with their dominant child caring role, and up there in their house lending mortgage capacity.

One British survey says 1/20 British people receive an inheritance worth more than their ten years of net earnings. NZ mirrors overseas patterns, all the above applies here. The effect of all this upon the retirement income savings of the senior generation is considerable, self-sacrifice for the young can be counterproductive for their own savings!

The Annuities issue requires detailed attention.


“The cost of caring for the sick and elderly will continue to grow, as long as the focus is on adding years to life, instead of adding life and dignity to years’”

Overseas research suggests the issue of living longer (possibly 1.1 -2.75 years longer every 10 years, dependent upon  which research source is used) has camouflaged the real issue that senior years quality of life is significantly impacted and impaired by illness and disease. The issue of improving health is questionable with a lot of research suggesting significant and often chronic ill health, diabetes, stroke, bowel, cancer etc., is not decreasing but increasing. Invalid perceptions in this area abound.

E.g. The Office for National statistics United Kingdom  noted life expectancy is decreasing in the UK, with older people dying at a rate higher than previous trends, and rising  life expectancy stalling An Oxford professor (Danny Dorling} who analyzed the data , said the figures were alarming, suggesting frail people were increasing, Alzheimer’s and austerity measures possibly contributing? Dorling also said people were somewhat blasé about the situation, “5 years ago such data would have got a lot more attention”.

The NZ Listener Feb 2018 reported “We may be living longer, but those extra years are increasingly likely to be marred by ill health.

A study published in Age and Ageing, the journal of the British Geriatrics Society, reports that the number of older people diagnosed with 4 or more diseases will double between 2015 and 2035. A third will be diagnosed with dementia, depression or a cognitive impairment and many also will have severe arthritis

The Australian Bureau of Statistics 2019 has just wound back long term life expectancy projections, rising obesity and associated illness, road accidents and suicides overwhelming advances in medical science.

Professor McDonald Massey University, recent critique of the NZ Health system would be an excellent starting pint:

A blueprint for change

Professor McDonald says there are viable, evidence-informed alternatives for dealing with the country’s future health and healthcare challenges:

  • Stop thinking of health as a set of medical challenges that have social and economic consequences. Instead, approach health (physical, emotional, spiritual, social) as a set of social, economic, political, cultural, and educational challenges (and opportunities), which sometimes produce medical consequences. 
  • Reduce poverty and increase social connectivity and inclusion – because it is good for health and the economy.
  • Stop blaming seniors for rising healthcare costs when the problem is largely caused by an ill-equipped health system being asked to deal with chronic conditions such as diabetes, asthma, and dementia.
  • Put more emphasis on, and funding into, disease prevention at a population and policy level, rather than through acute and primary care.
  • Protect health-enabling measures within international trade agreements.
  • Support healthy ageing by rethinking the design and accessibility of houses, transport, food, education, recreation, and complex care for seniors.
  • Protect dignity and autonomy at end-of-life, including more advanced care planning and hospice care. 
  • Increase public and private sector investment to make New Zealand food the most nutritious and environmentally sustainable in the world – a goal that will improve health as well as long-term exports. 
  • Increase investment and research to track and fight infectious disease through microbiological innovation


The trend is for seniors to work longer in the work place. This leads to senior year’s people contributing to the economy and societal well-being, including paying taxes, all positive engagement. However contrary to the headlines, research does suggest this work force engagement is because of necessity, due to marriage failures, poor investment decisions, caught up in the semi-regular pattern of world economic problems,  and the simple reality of requiring  paid work to maintain reasonable  living standards.

Research indicates most of the population do not have the choice of work, let alone the opportunity, they have to find work to sustain a living income, with hurdles every step of the way. Choice is only available for the privileged (educated)

Those that are educated have significantly more choice in the matter, but most people are working because they have too and not because they want to. Rampant bias against seniors in the workforce exists, compounding the problem for those seeking work.

  • An assessment of the impact that the following will have on government retirement income policies, including Kiwi Saver and New Zealand superannuation:
  1. The changing nature of work, including the increasing number of people who are self-employed and/or working in temporary and flexible jobs;

Nil Comment

  1. Declining rates of home ownership;

Nil comment

  1. Changes in labour market participation of those 65 and older.


The trend is for seniors to work longer in the work place. This leads to senior year’s people contributing to the economy and societal well-being, including paying taxes, all positive engagement. However contrary to the headlines, research does suggest this work force engagement is because of necessity, due to marriage failures, poor investment decisions, caught up in the semi-regular pattern of world economic problems,  and the simple reality of requiring  paid work to maintain reasonable  living standards.

Research indicates most of the population do not have the choice of work, let alone the opportunity, they have to find work to sustain a living income, with hurdles every step of the way. Choice is only available for the privileged (educated)

Those that are educated have significantly more choice in the matter, but most people are working because they have too and not because they want to.

Rampant bias against seniors in the workforce exists, compounding the problem for those seeking work.

  • Information about, and relevant to, the public’s perception and understanding of Kiwi Saver fees, including:
    1. The level and types of fees charged by Kiwi Saver providers; and
    2. The impact that fees may have on Kiwi Saver balances.


Fee’s in New Zealand for the last decade are too high, and have been a golden mile for fund managers. They are well above most OECD countries. The Government should be talking them down, and also consider legislative requirements. Active funds should never be more than 1% and passive fees from 0.5% to.60%. The situation continues to be so bad, a Commission or Task force on this topic is required

  • Information about the public’s perception and understanding of ethical investments in Kiwi Saver, including:
    1. The kinds of investments that New Zealanders may want to see excluded by Kiwi Saver providers; and
    2. The range of Kiwi Saver funds with an ethical investment mandate.

Nil comment

  • An assessment of the impact of current retirement income policies on current and future generations, with due consideration given to the fiscal sustainability of current New Zealand superannuation settings.



The current levels are low compared to other OECD countries. Any reasonable projections show this will continue for many years. The costs re-funding this issue and its benefits mean NZ is in a good state; our twin model schemes (Kiwi Saver and NZ Superannuation) must be available to future generations. Be wary of economic forecasts which take no account of societal adjustments over times, there predicative relevance is minimal.

  • Information about the public’s perception of the purpose and principles of New Zealand superannuation.


Our members believe it is necessary, many see it as an entitlement, and it’s a key component of their retirement income money plans, the safety net for maintaining standard of living and investment decisions. Adjustments to the current model rather than significant change is the message

  • An assessment of decumulation of retirement savings and other assets, including how the Government can ensure New Zealanders make the most of their money in the decumulation phase.



 The emergency of Life Time Income as a provider cannot be emphasised enough. The product is solid and well thought out.  More competition is needed.

 Decumulation is a classic long term issue, which due to that fact seems to be avoided by policy makers.

 New Zealand has a great opportunity to be a world leader in new initiatives in this area and annuities must be addressed. The lump sum received from Kiwi Saver requires addressing e.g. combination of annuity, insurance and a component of the lump sum available for the individual receipt ant could be considered. Using Kiwi Saver Funds to purchase from Government increased Superannuation payment is a useful thought, and the Government Super Fund could be also be a useful vehicle to offer Government annuities, or be converted into such a scheme.

 Alec Waugh



2019 Retirement Commission Review. A contribution from Littlewood and Chamberlain

Both are significant contributors on New Zealand Superannuation, and have the knowledge and credentials to remain heavyweight commentators.

This is the stuff Research units (MMP Parties) and the Commission should be looking at carefully, its magnitude and complexity being both a strength and a weakness.

Informing the 2019 Review – 133 questions

Press Release

Michael Chamberlain – an Auckland-based actuary and investment adviser.

Michael Littlewood – now retired but an active participant in public policy issues associated with saving and superannuation and a co-founder of the University of Auckland’s Retirement Policy and Research Centre.

Two years ago, Michael Chamberlain and Michael Littlewood published what they suggested was the review of retirement income policies that New Zealand should have received from the Retirement Commissioner in 2016 (The Missing 2016 Review – building trust for life beyond work).

By December this year, the Retirement Commissioner must complete the next triennial review. The terms of reference for the 2019 Review were published earlier this year and listed eight general topics (available here).

Chamberlain and Littlewood have re-cast their 2016 report and have now published Informing the 2019 Review – 133 questions that New Zealand needs answered. This latest report is available online at www.alt- and is intended to help the 2019 Review by identifying the key issues, detailing what evidence is available (local and international) and then listing the questions that need answering on all aspects related to saving, pensions and retirement incomes, and the review process itself.

In 2017, the authors described the Retirement Commissioner’s 2016 report as an “evidence-free zone”. They now say that “if the 2019 Review is to achieve anything, evidence-gathering should be at its foundation. Unfortunately, the Retirement Commissioner doesn’t have the time and probably won’t have the resources to deliver the review that New Zealand needs. However, the 2019 Review can recommend that we start to gather data to form the basis for future, evidence-led, policy decisions.”

As in 2016, Chamberlain and Littlewood’s report has 22 sections covering the key parts of New Zealand’s overall retirement income framework. All the information has been updated from 2017 and questions have been added to or re-framed to take account of recent developments.

For example, the Tax Working Group’s recommendations for new tax breaks for KiwiSaver are analysed and labelled inconsistent and lacking any evidential basis. Similarly, the May Budget’s unheralded changes to New Zealand Superannuation are also criticised as failing the evidential test.

Chamberlain and Littlewood label the terms of reference for the 2019 Review as “in the same timid mould as its 2016 equivalent” and they do not expect much more than has been produced by the earlier six equivalent reviews . “That will be a wasted opportunity”, they say.

To put their 2019 report into context, the first section lists the authors’ nine top priorities.

Each of the following 21 sections describes one particular issue and there are many more issues than the eight that the Terms of Reference identify. Each of the 21 sections ends with a series of questions that New Zealanders need to discuss before we can settle public policy on that issue. Most require gathering data to inform the issues. Chamberlain and Littlewood suggest that, without the necessary evidence, New Zealand cannot make the robust decisions that are now needed. How for example, they ask, can the Retirement Commissioner examine the impact of “declining rates of home ownership” when there is actually no reliable evidence of that happening?

The authors say that their report’s overarching theme, as in 2017, is about what governments can and cannot do:

– There is a range of things that only the government can do – it should do those things.

– There is another range of things that, based on the evidence, the government seems unable to do – it should stop doing those.

– Finally, there are things that the government is doing but, based on the evidence, seem not to be effective – it should also stop doing those.

“This is evidence-based policy-making – if it works, based on the evidence, then do it; if it doesn’t work, stop doing it. If we do not know whether it works, gather the evidence before deciding what to do. For New Zealand, this approach to policy–making on retirement incomes would constitute a change but it’s time New Zealand tried it. Before that process can even start, there is a lot of data to gather.”

Chamberlain and Littlewood say that the Retirement Commissioner’s 2016 Review did not achieve much more than the preceding five similar reviews. Without a radical change in approach, they do not expect the 2019 Review to make the progress that New Zealand needs to make on a topic that, directly or indirectly, will affect every single New Zealander. They suggest that New Zealand deserves better.
Report accessible at:

Posted by Alec Waugh August 2.