Most New Zealanders would accept a compulsory KiwiSaver regime in lieu of higher taxes, a new Otago University study has found.
However, the survey shows a slight increase in the anti-compulsion camp compared to a similar exercise carried out in 2014 – albeit with a large majority not bothered either way.
“The lack of opposition to compulsory savings combined with the opposition to higher taxes means that programmes that substituted compulsory saving for lower taxes would still be very popular,” the report says.
But the study, which asked respondents to rank a series of hypothetical retirement income scenarios created according to seven criteria, also reveals significant differences between socio-economic ‘clusters’.
For example, those from lower-income households or non-KiwiSaver members tend to oppose compulsory savings.
“In contrast, higher income people and those who are confident they will be comfortable in retirement are more opposed to means tests, more supportive of compulsory saving schemes, and more willing to increase the age of eligibility to 67 years,” the study says.
Somewhat surprisingly, though, the research reveals that the diverse retirement income preferences of Kiwis “do not depend much on observable characteristics such as age, education, income or ethnicity”.
“Rather, New Zealanders’ preferences reflect unobservable characteristics,” the report says.
The online survey completed by almost 1,300 New Zealanders aged over 18 found most results remained consistent with the earlier 2014 effort, bar some hardening in support for keeping the pension age at 65 and more opposition to raising taxes now to fund future retirement income.
In general, “the 2022 respondents were less confident than the 2014 respondents that they will be comfortable in retirement”.
Nonetheless, the ‘Continuity and change: Retirement income preferences in New Zealand, 2014 – 2022’ report authored by Reserve Bank of NZ economist, Andrew Coleman, in an academic capacity along with Jelita Noviarini and Trudy Sullivan of Otago University, notes current government policies may not be fit-for-purpose.
“… it is not obvious that policies that were designed in the second half of the 20th century to deal with 20th century circumstances are the most appropriate policies for the generations who will spend their entire adult lives in the 21st century,” the study says.
“At the very least, increases in longevity combined with the baby boomer demographic bulge mean that the costs of New Zealand’s retirement income policies have fallen (and will fall) quite differently on different generations, with generations born after 1980 facing much higher costs than those born earlier.”