Tuesday 26 May 2015

Kiwisaver Tweaks

I was a bit surprised to see Labour complaining about changes to Kiwisaver in last week's budget. The $1000 start-up payment's been abandoned, with the savings put to programmes better targeted at the poor.

Both analyses I'd seen on the programme showed that it did nothing to change overall savings rates. Here's the 2011 analysis using limited survey data.  Here's the 2014 version using SOFIE and IRD administrative data.

The NBR points to Treasury's RIS, which recommended bolder changes: 
The Treasury's preferred option would have been a fundamental review of the KiwiSaver legislation's purpose to deal with the "imprecise definition of a target population" for the scheme, which is meant to be help Kiwis prepare for retirement. That option was out of scope for the advice the government sought from the Treasury on identifying measures to "improve KiwiSaver effectiveness ... and reduce the fiscal cost."
Here's the full Regulatory Impact Statement. Only 7% of scheme participants are in its target group. What a waste.

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