Public back compulsory savings policy idea

New Zealanders are firmly in favour of making contributions to employees’ personal retirement savings accounts compulsory.

The Financial Services Council (FSC) has not taken a position on whether savings contributions by employees and employers should be voluntary or compulsory.  It says this is a decision for the public and politicians to make. It raises the idea for public debate in a major report released on Sunday (June 17).

A May 18 to June 8 Horizon Research poll of 3,177 adult New Zealanders commissioned by the FSC finds:

·         74% think New Zealand should, over time, introduce a retirement savings scheme in which contributions by both employees and employers are compulsory. Only 16% oppose

·         72% support the FSC suggestion of increasing savings contributions to reach 10% a year (5% from employees, 5% from employers).

In terms of how compulsory contributions might be phased in

·         52% support the idea of contributions being made of 0.5% each year by the employee and employer over 10 years, until the total each year reaches 10% of an employees’ income.  

Best option for New Zealand:

Asked if making KiwiSaver compulsory or voluntary is the best option for New Zealand, regardless of their personal point of view

63.7% favour compulsion

26.7% favour voluntary, while 9.6% don’t know.

Compulsory versus voluntary: decision for public, politicians:

The FSC suggests the question of whether or not savings contributions by employees and employers should be voluntary or compulsory be considered by a new all-party Parliamentary Select Committee on Retirement Income Security. It suggests such a committee oversee the development and passage of new retirement income policy. The FSC suggests the committee gather reports from officials and others, issue a discussion document, consult with the public, and come up with a new long-term retirement income bill by the end of 2013.

If that bill is passed with less than 75% support from MPs it suggests the law be the subject of a referendum in 2014.

Party voter support:

FSC Chief Executive Peter Neilson says the research shows overwhelming public support to not only keep NZ Super, but to start using savings to ensure any KiwiSaver Plus participant, and particularly those aged under 40, can live comfortably in retirement. For those under 40 the FSC proposes a scheme which will more than double the current income provided by NZ Super. At the same time the FSC wants the NZ Super entitlements to remain the same for all those close to retirement or receiving it now.

Mr Neilson says the latest survey on retirement policy option suggestions shows most of the parties in Parliament would have their voters’ support if they move to consider new retirement savings options.

Some 73% of people who voted National at the 2011 general election think making KiwiSaver compulsory would be in New Zealand’s best interests. Support among other parties’ voters was: 66.3% Labour, 70.1% Green, 74% NZ First, 60.1% Maori Party and 79.5% Mana.  

The FSC says it has polled support for other KiwiSaver Plus policy options and plans to release those results shortly. 

The FSC report on future retirement options is available at www.fsc.org.nz

The survey was conducted by Horizon Research for the FSC. 3,177 respondents were 18+. Results were weighted match population averages for age, gender, ethnicity, employment, education level and, to ensure a sample aligned with 2011 voter support, party vote in 2011. The maximum margin of error at a 95% confidence level is ±1.7% overall. Interviewing was undertaken between May 18 and June 8, 2012.

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ENDS

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