The Financial Services Council of New Zealand has released a new discussion paper which aims to identify six key issues for the KiwiSaver 2050 scheme.
Although KiwiSaver was still a young scheme, it was expected to grow fast to almost one trillion dollars in funds which would be under management by 2050, the paper said.
“In commissioning KiwiSaver 2050 we wanted to help start a debate and conversation about how KiwiSaver can be refined and improved in future years to better deliver for New Zealanders and our long-term health and well-being”, Richard Klipin, chief executive of the Financial Services Council of New Zealand, said.
“We’re not claiming to have all the answers but we’re hoping that KiwiSaver 2050, by taking a holistic look at the KiwiSaver framework rather than an issues based approach, will help further the debate.”
The key six issues which were said to be fundamental to the long-term success of KiwiSaver included:
- Increasing participation;
- Building contribution levels which would increase the savings level of those who were contributing already to a sustainable point;
- Developing options for those who have already retired to decumulate their savings;
- Continued focus on financial literacy;
- Improved scheme efficiency and effectiveness; and
- Political leadership and policy stability.
According to Klipin, each of the areas identified above were complex and there were no easy fixes or quick solutions to achieving them.
“For instance, increasing participation through providing a minimum level of saving so that those who are unable to join KiwiSaver can get started in the scheme.
“Or building contribution levels by increased engagement with KiwiSaver members in default funds to move them to more appropriate funds, making conservative funds less conservative, and continuing KiwiSaver contributions when a member is on parental leave,” he said.
“The paper also proposes consideration being given to the development of an annuity market in New Zealand to aid with decumulation, and the development of a political accord and dedicated Government Ministry to ensure ongoing stability and predictability in retirement policy making.”