The Financial Services Council (FSC) welcomes the Government’s decision to increase the default KiwiSaver contribution rate from 3 to 4% by 2028 and extending government and employer contributions to working 16 and 17 year olds, recognising the importance of stronger savings habits in improving long-term financial wellbeing for New Zealanders.
CEO of the FSC Kirk Hope believes this initiative is a good step towards invigorating New Zealand’s capital markets and fostering economic growth.
New Zealand's current default minimum employee and employer contribution of 3% is among the lowest in the OECD. FSC suggests a combined contribution goal by 2037 of 10% – the 30th anniversary of KiwiSaver.
Today's announcement gets us closer to the contribution goal, however the Government's decision to reduce its contribution could discourage enrolment in the scheme or a commitment to contributing during periods of low income, such as maternity leave, and particularly for the self employed.
A higher contribution rate is an important step toward ensuring that future retirees can maintain a standard of living consistent with their working years. A phased approach is crucial to ensure this is sustainable for workers and employers alike – employers and employees need time to adjust to higher contribution rates.
The FSC looks forward to continued collaboration with the Government to further strengthen the KiwiSaver system in line with a clear, long-term strategy.
ENDS
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