The default Kiwisaver contribution rate could be due for a shakeup.
Finance Minister Nicola Willis is looking at upping the amount employees and employers contribute to their KiwiSaver accounts.
With an ever-increasing aging population, Willis explained she wants to ensure more Kiwis are financially secure in retirement.
Simplicity co-founder Sam Stubbs has voiced support with these proposed changes.
"It's a recognition of the fact that we just have to save more for our retirement - because unless we do, national superannuation and the cost of health will eat up our current tax base."
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Speaker 1 (00:06):
You're listening to the Sunday Session podcast with Francesca Rudgin
from News Talks EDB.
Speaker 2 (00:12):
And the Default Can we say the contribution rate could
be on the rise. Finance Minister Nikola Willis is currently
seeking advice on what key we Saver needs to look
like in the future, which could include increasing the default
setting from three percent. With our agent population, Willis says
she wants to see balances rise so key Wes are
(00:32):
more financially secure and retirement to discuss the future of
can we Save our simplicity? CEO Sam Stubbs is with me.
Thanks for your time this morning, Sam Curata, Okay, are
you encouraged that the Finance minister is seeking advice and
looking into the future of key we Saver? It is
long overdue.
Speaker 3 (00:50):
Yes, yeah, yeah, Look, I'm very encouraged, particularly from a
national lead government. You know, keep Saver was a labor
government invention, and what you've seen over the years is
the sort of labor led governments tenderly things alone. A
national lead goms have tended to chip away to the bit.
So I think this is a really important turn in
terms of direction, and I think it's a recognition of
(01:13):
the fact that we just have to say more for
our retirement because unless we do national superannuation in the
cost of health particularly, well, we'll eat up our current
tax space. You know, if you look at the current
tax collection from all income taxes, while by twenty fifty,
unless we do something about it, it will be entirely
spent on national super and health. You know, there'll be
(01:34):
nothing there for schools, hospitals, prisons and anything like that.
So yeah, we will need to do something about it.
This is a very encouraging signal.
Speaker 2 (01:43):
It's a really positive out look you've given us there, Sam, Yeah,
I know.
Speaker 3 (01:47):
I know. Well it could be really good. I mean,
I mean, look, here's the good side of all of that.
So if you look at what key We Saber managers
put into New Zealand now, it's about thirty percent of
their investments. It's nothing changed in key We Saber. By
twenty fifty, Key We Save will be about a trillion dollars.
And at KEW Serber managers would have invested another two
(02:09):
hundred and forty or one hundred and fifty billion dollars
in New Zealand. And that's if nothing else change, right,
That almost plugs our infrastructure gap, but if contributions start
rising and we start getting closer to countries like Australia,
that amount could go up significantly. So I am actually
extremely optimistic. I do think we're entering the next thirty
years I think will possibly be the most prosperous in
(02:31):
our history. And it's because for the first time ever,
we are saving our way to prosperity vi a ke
We say the key we save is probably the most
important piece of legislation we've had in this country for decades,
and because we will be investing that money, and I
think a lot of it has to go into infrastructure
and housing, because nothing else really moves the needle, you know,
everything else is a rounding area. From an investment point
(02:51):
of view. Only housing and infrastructure can soak up that
amount of money. If we're going to be doing that,
then we will actually start to be building, you know,
the roads and the hospitals and the schools that we
need with our own money. We won't have to bring
it in from overseas, and we won't have to borrow it.
It's a very very optimist the future. But the more
we save, the more we'll have to invest in. The
better off will be so Sam.
Speaker 2 (03:10):
The current default rate, the key we save us three percent,
should that be increased?
Speaker 3 (03:15):
Yeah, look it should be. If you if you have
a look at what the average key we saver says,
it's three percent from the employer and three percent themselves.
So it's called that six percent in total. If you
look at a country like Australia which has a very
successful policy there, that's already twelve percent, and most of
the OECD countries now have got higher than six percent
contribution rates. We're still we're going to have to do
that because we're going to be living longer and healthcare
(03:38):
is only going to get more expensive, and we all
want to be living in a nice home. And you
know what you've started to see now in New Zealand
as more and more people needing their own homes. You
have widows and widowers living by themselves for longer and
so on. So we need, you know, more housing, more hospitals,
and more money because we live longer. So we're going
to have to get those contribution rates up for sure. Now.
The way to do that is slowly, you know, you
(04:00):
don't do it dramatically because that it's money out out
of people's pockets. So if you have a look at
what a successful countries have done to increase it by
about a half a percent a year, that allows it
to get built into wage negotiations, everybody gets ready for it.
I do think it has to be bipartisan. You know,
if national brought something in here as a policy, it
would be nice to see labor endorsing it, or if
(04:21):
they were to change it, only change it very at
the margin. But there's a well trocked trodden path here
globally as to how you do this. We don't have
to do anything new, We just have to do what's
worked elsewhere. Same.
Speaker 2 (04:32):
Would you like to see it made compulsory.
Speaker 3 (04:35):
I absolutely would, because the only problem with Kiwi save it.
I mean, if it's an absolutely wonderful scheme, but the
only thing I don't like about it is that if
you don't contribute effectively, what it's doing is it's making
those who contribute welfare and those who don't pourer. So
the key we save a risks discriminating against the poor.
If it's left as a voluntary system, the people who
(04:56):
most need it, that the people who most don't want it,
you know, or don't want to save, so you really
have to actually force them to do this so that
they have a pool of money and with that money
come choices and dignity in life. As you think it
should probably should be actually compulsory from birth, and I
think the government should be providing some sort of subsidy
from day one. There it's but elsewhere in the world
(05:19):
it is pretty much compulsory in most WECD countries. Now
it's almost that now in the sense that you know,
you get put into it and you have to consciously
opt out of it. But if those people who are
opting out of it, particularly those the poorer people who
will most suffer later in life for not having a
pool of savings.
Speaker 2 (05:37):
I can remember my Australian family all winging in nineteen
ninety two when it became compulsory in Australia, and now
they're all just sitting back and laughing. What about tax?
Would you change how we tax? Can we savor?
Speaker 3 (05:50):
Look? I think how can we save? As tax is
really taxed is really a subset of how we tax
out our citizens generally. So while in an ideal world,
I'd like to see the contributions and the accumulation be
tax free and that gets taxed, you know when you
take it out. I think that's been very successful. I
don't have any expectations that governments will change that because
(06:11):
that would involve a border change of the tax system.
It doesn't matter in the sense that as long as
the contribution rates are righting, as long as it's compulsory,
then you'll end up having a wonderful system. Going back
to your Ossie point of view too, like here's a
really interesting statistic. Australia has five times our population rate,
but they have thirty five times our retirement savings. That's
(06:31):
why when you go to Sydney, Melbourne and Brisbane and Perth,
you know the roads are wider and the buildings are taller,
and the infrastructure just so much better. Right, So if
you save, you can invest in The Australians have about
half of their four trillion dollars that they have saved
invested in their local economy and it's funded an awful
lot of the infrastructure and Aussie and that's exactly what
(06:52):
could happen here now. But we do have to have
I think rising contributions, not only at the personal level
because you know you're saving more, but also from an
investment level too. If people keep on saving more, then
we can make much longer term investments. Can we save
A fund could end up owning you know, the ports,
the toll roads, the electricity distribution systems, and it would
be us investing in the hood. It would be you know,
(07:13):
q S, it's owned by Kiwis for Kiwi's. That would
be very cool.
Speaker 2 (07:18):
Sam Stubbs, as always, really appreciate your time. Thank you
so much.
Speaker 1 (07:22):
For more from the Sunday session with Francesca Rudkin. Listen
live to news Talks it'd be from nine am Sunday,
or follow the podcast on iHeartRadio.
You're listening to the Sunday Session podcast with Francesca Rudgin
from News Talks EDB.
Speaker 2 (00:12):
And the Default Can we say the contribution rate could
be on the rise. Finance Minister Nikola Willis is currently
seeking advice on what key we Saver needs to look
like in the future, which could include increasing the default
setting from three percent. With our agent population, Willis says
she wants to see balances rise so key Wes are
(00:32):
more financially secure and retirement to discuss the future of
can we Save our simplicity? CEO Sam Stubbs is with me.
Thanks for your time this morning, Sam Curata, Okay, are
you encouraged that the Finance minister is seeking advice and
looking into the future of key we Saver? It is
long overdue.
Speaker 3 (00:50):
Yes, yeah, yeah, Look, I'm very encouraged, particularly from a
national lead government. You know, keep Saver was a labor
government invention, and what you've seen over the years is
the sort of labor led governments tenderly things alone. A
national lead goms have tended to chip away to the bit.
So I think this is a really important turn in
terms of direction, and I think it's a recognition of
(01:13):
the fact that we just have to say more for
our retirement because unless we do national superannuation in the
cost of health particularly, well, we'll eat up our current
tax space. You know, if you look at the current
tax collection from all income taxes, while by twenty fifty,
unless we do something about it, it will be entirely
spent on national super and health. You know, there'll be
(01:34):
nothing there for schools, hospitals, prisons and anything like that.
So yeah, we will need to do something about it.
This is a very encouraging signal.
Speaker 2 (01:43):
It's a really positive out look you've given us there, Sam, Yeah,
I know.
Speaker 3 (01:47):
I know. Well it could be really good. I mean,
I mean, look, here's the good side of all of that.
So if you look at what key We Saber managers
put into New Zealand now, it's about thirty percent of
their investments. It's nothing changed in key We Saber. By
twenty fifty, Key We Save will be about a trillion dollars.
And at KEW Serber managers would have invested another two
(02:09):
hundred and forty or one hundred and fifty billion dollars
in New Zealand. And that's if nothing else change, right,
That almost plugs our infrastructure gap, but if contributions start
rising and we start getting closer to countries like Australia,
that amount could go up significantly. So I am actually
extremely optimistic. I do think we're entering the next thirty
years I think will possibly be the most prosperous in
(02:31):
our history. And it's because for the first time ever,
we are saving our way to prosperity vi a ke
We say the key we save is probably the most
important piece of legislation we've had in this country for decades,
and because we will be investing that money, and I
think a lot of it has to go into infrastructure
and housing, because nothing else really moves the needle, you know,
everything else is a rounding area. From an investment point
(02:51):
of view. Only housing and infrastructure can soak up that
amount of money. If we're going to be doing that,
then we will actually start to be building, you know,
the roads and the hospitals and the schools that we
need with our own money. We won't have to bring
it in from overseas, and we won't have to borrow it.
It's a very very optimist the future. But the more
we save, the more we'll have to invest in. The
better off will be so Sam.
Speaker 2 (03:10):
The current default rate, the key we save us three percent,
should that be increased?
Speaker 3 (03:15):
Yeah, look it should be. If you if you have
a look at what the average key we saver says,
it's three percent from the employer and three percent themselves.
So it's called that six percent in total. If you
look at a country like Australia which has a very
successful policy there, that's already twelve percent, and most of
the OECD countries now have got higher than six percent
contribution rates. We're still we're going to have to do
that because we're going to be living longer and healthcare
(03:38):
is only going to get more expensive, and we all
want to be living in a nice home. And you
know what you've started to see now in New Zealand
as more and more people needing their own homes. You
have widows and widowers living by themselves for longer and
so on. So we need, you know, more housing, more hospitals,
and more money because we live longer. So we're going
to have to get those contribution rates up for sure. Now.
The way to do that is slowly, you know, you
(04:00):
don't do it dramatically because that it's money out out
of people's pockets. So if you have a look at
what a successful countries have done to increase it by
about a half a percent a year, that allows it
to get built into wage negotiations, everybody gets ready for it.
I do think it has to be bipartisan. You know,
if national brought something in here as a policy, it
would be nice to see labor endorsing it, or if
(04:21):
they were to change it, only change it very at
the margin. But there's a well trocked trodden path here
globally as to how you do this. We don't have
to do anything new, We just have to do what's
worked elsewhere. Same.
Speaker 2 (04:32):
Would you like to see it made compulsory.
Speaker 3 (04:35):
I absolutely would, because the only problem with Kiwi save it.
I mean, if it's an absolutely wonderful scheme, but the
only thing I don't like about it is that if
you don't contribute effectively, what it's doing is it's making
those who contribute welfare and those who don't pourer. So
the key we save a risks discriminating against the poor.
If it's left as a voluntary system, the people who
(04:56):
most need it, that the people who most don't want it,
you know, or don't want to save, so you really
have to actually force them to do this so that
they have a pool of money and with that money
come choices and dignity in life. As you think it
should probably should be actually compulsory from birth, and I
think the government should be providing some sort of subsidy
from day one. There it's but elsewhere in the world
(05:19):
it is pretty much compulsory in most WECD countries. Now
it's almost that now in the sense that you know,
you get put into it and you have to consciously
opt out of it. But if those people who are
opting out of it, particularly those the poorer people who
will most suffer later in life for not having a
pool of savings.
Speaker 2 (05:37):
I can remember my Australian family all winging in nineteen
ninety two when it became compulsory in Australia, and now
they're all just sitting back and laughing. What about tax?
Would you change how we tax? Can we savor?
Speaker 3 (05:50):
Look? I think how can we save? As tax is
really taxed is really a subset of how we tax
out our citizens generally. So while in an ideal world,
I'd like to see the contributions and the accumulation be
tax free and that gets taxed, you know when you
take it out. I think that's been very successful. I
don't have any expectations that governments will change that because
(06:11):
that would involve a border change of the tax system.
It doesn't matter in the sense that as long as
the contribution rates are righting, as long as it's compulsory,
then you'll end up having a wonderful system. Going back
to your Ossie point of view too, like here's a
really interesting statistic. Australia has five times our population rate,
but they have thirty five times our retirement savings. That's
(06:31):
why when you go to Sydney, Melbourne and Brisbane and Perth,
you know the roads are wider and the buildings are taller,
and the infrastructure just so much better. Right, So if
you save, you can invest in The Australians have about
half of their four trillion dollars that they have saved
invested in their local economy and it's funded an awful
lot of the infrastructure and Aussie and that's exactly what
(06:52):
could happen here now. But we do have to have
I think rising contributions, not only at the personal level
because you know you're saving more, but also from an
investment level too. If people keep on saving more, then
we can make much longer term investments. Can we save
A fund could end up owning you know, the ports,
the toll roads, the electricity distribution systems, and it would
be us investing in the hood. It would be you know,
(07:13):
q S, it's owned by Kiwis for Kiwi's. That would
be very cool.
Speaker 2 (07:18):
Sam Stubbs, as always, really appreciate your time. Thank you
so much.
Speaker 1 (07:22):
For more from the Sunday session with Francesca Rudkin. Listen
live to news Talks it'd be from nine am Sunday,
or follow the podcast on iHeartRadio.
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