While Australia continues to debate how quickly to increase the superannuation guarantee (SG), the New Zealand financial services industry has suggested that kiwis have the ability to adjust their contributions according to their financial circumstances.
The suggestion represents a key recommendation flowing from New Zealand Financial Services Council (NZFSC) research across around 2,100 respondents about their retirement savings and the workings of the KiwiSaver regime.
A key finding of the research was the need to develop ways in which KiwiSavers could easily adjust contributions as their financial circumstances change.
It pointed out that under the current scheme, KiwiSavers can voluntarily increase their own contributions in pre-set percentages, but then added that few were saving enough, and this had to be addressed.
The research showed that close to 70 per cent of respondents would support increasing the base contribution from three per cent to four per cent.
The research analysis concluded that it had demonstrated that radical changes to enable flexible, controlled and automatic increases in contributions should be introduced.
It said that increasing the base employer plus employee contribution from six per cent to eight per cent, as recently proposed by Government, could create a 28 per cent increase in savings over a 45-year period.
“If a KiwiSaver chooses to increase their share further, resulting in a 10 per cent contribution, this could result in a significant 56 per cent increase in savings,” the FSC analysis said.