Will pushing people to lift their KiwiSaver balances make New Zealanders better off overall?
By Susan Edmunds of RNZ
With $11 billion going into New Zealanders' KiwiSaver accounts over the past year, and a combined balance of almost $150b, it might seem that the answer is obviously yes.
But as the scheme nears 20 years in existence, and more political parties call for compulsion, some commentators still argue it may not be as wealth-boosting as hoped.
University of Auckland Retirement Policy and Research Centre co-director Michael Littlewood said New Zealand was often compared unfavourably to Australia, which had amassed more than AU$4 trillion in retirement assets, with compulsory higher contribution rates.
But he said the Australian experience showed that, while pushing a superannuation scheme changed where wealth was held, it did not necessarily make people wealthier, or reduce hardship in retirement.
There, superannuation is 49% of Australian household financial assets compared to 11% in New Zealand. But he said the fact that it had not made households wealthier relative to their incomes was important.
"Net worth is nine to 10 times income in both countries, and the median New Zealand adult ranks fourth in the world for wealth, only one place behind Australia."
He said it could also come at a significant taxpayer cost. Australia's superannuation tax concessions cost A$60 billion a year, he said.
Means-testing of the pension in Australia helps to save on pension costs, though. The Government spends about 8.4% of its budget on the pension there, compared to 12.6% in New Zealand. Australia's percentage is forecast to decline while New Zealand's is set to grow on current settings.
Littlewood said it was notable that Australian household debt had climbed to 177% of income while New Zealand's had been flat at 125% for two decades, which might indicate that Australians were more willing to take on debt for longer, knowing that their superannuation savings would help to clear it.
Littlewood said after 18 years of KiwiSaver superannuation assets were just back to their 1999 level.
"Perhaps a government cannot force its citizens to save more than they want to save. Despite the seemingly very different environments in Australia and New Zealand, the total costs to taxpayers of each of the two systems are much closer than headlines suggest and the final outcomes are much the same."
The Retirement Commission said it looked at whether KiwiSaver was likely to make New Zealanders better off overall in its review of retirement policy last year.
"Early research, using data from 2010, found little evidence of a boost, particularly during the years when the scheme was heavily subsidised.
"That said, research using data from 2010 is likely to have covered too short a time frame to fully assess the impact of KiwiSaver, which had only been in place for three years. Further, the data was likely to have been influenced by the effects of the Global Financial Crisis, which began in 2008. KiwiSaver today is very different to the scheme in 2010, but there are no updated estimates ... This partly reflects data issues."
It said as KiwiSaver had matured, the role of Government subsidies had diminished and a greater share of KiwiSaver balances was now likely to come from new savings.
"While a definitive assessment would require formal modelling or access to longitudinal data, it does seem in New Zealand that more of the savings in the scheme are additional.
"These savings come from what are called 'passive savers', people who wouldn't otherwise save, versus 'active savers', people who would save anyway but will change the form of saving to maximise tax concessions."
Data for the KiwiSaver scheme looks increasingly compelling.
Sixty% of New Zealand households contributed to savings of some sort in 2023, up from 18% in 2007.
The biggest change has been in the middle income range, where savings rates have increased from 9% to 15%, to 54% to 69%.
Younger people have also been boosted by KiwiSaver. The median financial assets of 25 to 34-year-olds has increased from $9000 to $22,000 over the 10 years to 2024, when adjusted for inflation.
Since 2016, households paying into KiwiSaver rose from 43% to 59%, while those paying into other super or managed funds fell only from 6% to 4%.
KiwiSaver had also become increasingly helpful for first-home buyers saving a deposit.
Simplicity chief economist Shamubeel Eaqub said no one would argue that 100% of KiwiSaver saving was activity that would not have otherwise happened, but there was clear evidence that such schemes broadened household savings rates and improved the wealth of younger age groups.
In the 12 months to August 2026, $11.1b was paid into KiwiSaver through Inland Revenue.
Members contributed $6.8b of that and employers $3.8b. The Government contributed $0.5b.
That is the reverse of the scheme's beginning. In the year to June 2008, Government was responsible for 55% of what went into the scheme, and 40% the next year.
Claire Matthews, a banking expert at Massey University, said she was confident KiwiSaver had increased savings rates, too.
She said many people had been able to access employer contributions via KiwiSaver that would not have been available to them otherwise.
Gertjan Verdickt, former senior lecturer in finance at the University of Auckland, said he thought the scheme also encouraged financial market participation more generally.
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