NZ lags behind rest of the world, says expert
10 April, 2018, 12:00 am
NEW Zealand is lagging behind other countries by failing to under take a comprehensive review of its retirement policy, a visiting expert is warning.
David Harris, a global expert in pension policy, visited New Zealand this week and said the country was getting out of kilter with the rest of the world where many had moved to increase the retirement age and push up savings rates.
“New Zealand needs to grasp the thorny needle of pension reform.
“It needs to have a comprehensive review,” said Mr Harris.
Mr Harris said the biggest issues facing the country were that the contribution rate for New Zealand ‘s KiwiSaver scheme was too low while the fees being charged by providers were too high.
“It is a double whammy. New Zealanders are not putting in enough and charges are very high.”
KiwiSaver has a minimum contribution rate of 3 per cent for workers and 3 per cent from employers as well as an annual government subsidy of up to $521 dollars.
But he pointed to Ireland which was increasing its rate to 6 per cent from employers, 6 per cent from employees and 2 per cent from the government and Australia where the rate is set to increase from 9.5 per cent to 12 per cent by 2025.
The issues with KiwiSaver were also compounded by people taking their money out to buy a first home when it should be kept aside for retirement, he said.
Millennials were struggling to get on the property ladder and were competing with the baby boomer investment generation who were using housing to generate an income because there was a lack of annuity products available.