The current National party proposals for Kiwi Saver compulsion etc, are a clumsy and crude attempt, a pre cursor for means testing and raising the age of retirement entitlement. In 2013 the Retirement Commission “Report to Govt Focusing on the Future,” said the following Page 66 Compulsion for Kiwi Saver
“Some submissions to the Review have proposed in response that Kiwi Saver membership and contributions should become compulsory. However, would be conceived by members as an additional tax (even though contributions are placed into individual account) and undermine the objective of encouraging individual responsibility and choice. It is also unclear the extent to which compulsion would allow higher income earners to simply substitute Kiwi Saver for other forms of savings, meaning that compulsion would not affect all members equally. A proportionally greater burden would probably fall on those with low incomes.
A compulsory system can also be expensive because of the need to ensure compliance. In addition, tax incentives are often still required to make compulsion acceptable. (Editor note-The Aussie scheme is full of expensive tax concessions-Nicola Willis silent on this topic). With compulsion there is little incentive for regulators and the financial industry to reduce complexity and allow for comparability of superannuation products. Financial services providers would not have to work so hard to keep customers, so competition and the pressure for innovation would be reduced.
In terms of compulsion being a means of building numbers of Kiwi Saver members, it needs to be remembered that these have grown on voluntary basis from zero to 2.2 million in the first 6 yrs of Kiwi Saver, (Editor note, this trend has continued since 2013 with over 90% of eligible employees contributing in 2026. There is a strong argument that Kiwi Saver numbers and membership have already achieved their purpose.
Finally, the 1992 Task Force on Private Provision for Retirement (The Todd Task Force) noted a likely outcome of a compulsory savings system would be introduction of means testing for New Zealand Superannuation”.
***The 2026 National Party Kiwi Saver proposals are a clumsy and crude policy shift, the outcome will be messy and less than satisfactory retirement income system for the next generations of New Zealanders