The New Zealand Council of Christian Social Services (NZCCSS) welcomes the leadership of the Institute for Democratic and Economic Analysis (IDEA) and the Retirement Commission in calling for measures to support New Zealanders to build savings from childhood through to retirement.
Both reports show that the current settings of our KiwiSaver scheme are failing to meet the needs of many New Zealanders and are not reducing wealth inequality.
The review of the retirement income policies, released today, highlights the need for “long-term political accord to focus on providing certainty for future generations” and makes 12 recommendations to government, including for cross-party action on the retirement income system. The ten-year roadmap for systems improvements would bring welcome stability and guidance that survives the political cycle.
“Life beyond 65 is changing, and NZCCSS supports updates to a system to make sure it reflects the reality and challenges of modern retirement,” says NZCCSS Kaiwhakahaere Matua (CEO), Alicia Sudden.
This includes the call to support older people to continue to build savings while working through the removal of unnecessary KiwiSaver exclusions for workers aged over 65. At the last census, 24.1% of those aged over 65 were in paid employment, yet only 36% of this group were receiving voluntary contributions from their employers. The recommendations would have employers still paying into the KiwiSaver schemes of their older employees, while government contributions would be stopped as Superannuation starts.
Older people remain in the workforce for both the social and economic benefits, with superannuation stretched by the cost of living. More than a third of those remaining in work after retirement state that financial pressure is forcing them to keep working. Yet they are effectively paid less than a younger employee in the same role due to the lack of KiwiSaver.
“Older people are a critical part of our workforce and our communities” says Alicia, “and they deserve to be paid the same as their colleagues.”
On top of this, the ‘Kids Kiwisaver’ report released yesterday by IDEA highlights how we can prevent a future savings deficit by investing in our children’s wealth generation early. Their proposal would mean that all children would be enrolled in KiwiSaver at birth, with government and parental contributions throughout a child’s life accumulating significant savings by the time that young person turns 18.
“For all young people to be able to have savings already built up by the time they turn 18 could be life changing for so many. It could make home ownership a reality for those who thought it was out of reach, break intergenerational cycles of poverty and prevent hardship in later life for the next generation.”
These two reports together highlight the whole-of-life approach needed to increase income and savings.
“Our member organisations work with individuals and communities where planning for retirement has fallen short often due to factors much earlier in life,” says Alicia. “Through programmes like Wesley Community Action’s Te Waka Haumaru and advocacy like the Christchurch Methodist Mission’s ‘Doors To Dignity’ campaign, our members are amplifying what happens when our later years have fewer dollars and more cents.”
“Our upcoming Older Persons Poverty Monitor will measure the impacts of a system that doesn’t provide for a dignified older age. We hope that decision makers will act on the recommendations from these two reports so that we will be able to report on reductions in older age poverty in years to come.”
“We need long-term solutions for the systems that will support us throughout our life course for now and for our next generations. Investing early and ensuring long-term stability are the best ways for us to achieve that,” concluded Alicia.
ENDS