The Retirement Commission (RC) has left KiwiSaver mostly alone in its latest triennial report… on government orders.
Jane Wrightson, Retirement Commission, says in the just-released statutory report on the sector that the now almost $90 billion savings regime was largely off-limits in the 2022 sector review.
“We have not been asked to focus as heavily on KiwiSaver for this review, given it was a strong feature of the 2019
RRIP [Review of retirement income policies],” Wrightson says in the report. “Delays caused by COVID-19 meant we are waiting to hear back on the Government’s plans for addressing some of the recommendations that were made in the previous review.”
The Ministry of Business, Innovation and Employment (MBIE) is also understood to be amid a separate KiwiSaver review that may lead to policy changes down the track.
However, Wrightson says some of the 2019 RRIP recommendations might yet see the light of day.
“I am particularly hoping to see under-18 and post-65 employer matching contributions,” she says. “The Government could also consider additional incentives to further enhance KiwiSaver, such as reconsidering the minimum contribution level, and incentivising KiwiSaver for those groups with lower balances, or who do not receive an employer matching contribution (such as the selfemployed).”
But the 2022 RC report does include a couple of minor KiwiSaver formal recommendations including the introduction of policies to encourage ‘decumulation’ products and allowing temporary NZ visa-holders to join a scheme.
Furthermore, the RC report urges government to relax the minimum contribution rules to enable those on parental leave to still collect the annual member tax credit regardless.
The review also calls for rules mandating all KiwiSaver providers to report more detailed data to the Financial Markets Authority every year. As well, the RC review calls for an extension of the requirement to offer “timely information and guidance” to members nearing retirement from the current default-only schemes to all providers.
Among a number of suggestions to the financial services industry, the RC says: “KiwiSaver providers should recognise the post-65 use of KiwiSaver and ensure their products have been adapted for the decumulation (drawdown) phase, as well as in the accumulation phase. In particular, withdrawal forms should include guidance regarding regular withdrawals, and the overall guidance customers receive from their provider should be clear.”
The report says employers could also help out by continuing to contribute for employees on parental leave.
“Employers could support staff, where financially able, to make voluntary contributions into their partner’s KiwiSaver during any periods of leave, to qualify for the government contribution,” the RC says.
In a separate report, a new industry thinktank (convened in partnership with the RC) has laid out six recommendations to boost savings habits of New Zealanders.
The ‘Encouraging savings’ paper published by the industry working group (chaired by former Westpac NZ chief, David McLean) includes support for a ‘sidecar’ fund system linked to KiwiSaver.
“Another recommendation was for banks, including CEOs, to meet at least once a year, to report on how they are using behavioural insights, research, and open banking systematically to incentivise positive financial behaviour for their customers,” a RC statement says. “The group recommend that if this doesn’t happen, the Government should step in to regulate it under the Conduct of Financial Institutions (CoFI).”