Rupert Carlyon: Koura Wealth managing director on National pledging to make changes to KiwiSaver contributions

A finance expert warns New Zealanders need reasons to pay in to KiwiSaver, if they're being told to contribute more.

National's made a pre-election pledge to progressively raise baseline worker and employer contributions by 2032 - to six percent each.

Koura Wealth managing director Rupert Carlyon says that's a nudge to contribute, but more's needed to turn it into a push. 

He says the US, Australia and Ireland use incentives. 

"These are all countries that use tax breaks, so tax deductions for contributions or tax deductions to allow you to kind of make your gains tax-free."

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Episode Transcript

Speaker 1 (00:00):
So time for a look at the NATS promise changes
to key we Save it. If re elected, the National
Party will gradually increase the default key we Save A
contribution rate to six percent and mandate that employers must
also match at six percent, taking it to twelve percent
in total. Prime Minister told my Costing this morning that
the policy will be a bottom line for the NATS
and coalition negotiations.

Speaker 2 (00:16):
I don't actually know why it is so political. I
think it's actually a common sense thing. If you look
at places like Ireland and Australia that are wealthier, they
actually have higher retirement savings.

Speaker 1 (00:26):
Rupert Carline is managing director of Colder Wealth and here's
with us now, Hi, Rupert Hi, I mean the comparison
with Ossie is not totally fair, is it.

Speaker 2 (00:35):
It's not even close to fair. We're saying six plus
cent six plus six to get us to tolp percent.
But actually for them it's a semi compulsory. They're a
big incentive, so people actually want to contribute, whereas here
this announcement's more like a nudge of saying, you know what, people,
you should contribute more to your keyy saver. But we're
not really going to give you any reason to do so.

Speaker 1 (00:54):
Do we have to make a compulsory Do you think I.

Speaker 2 (00:58):
Don't like compulsion because I think if we make it
compulsory without incentives, people are just going to see it
as a tax, and we know how everyone loves tax
and so to me, it's actually about giving choice. I
believe people should have the freedom to make their own decisions,
but we should be giving some form of incentives to
give them a nudge in the right direction.

Speaker 1 (01:17):
What incentives well.

Speaker 2 (01:20):
Internationally, so Chris Luxon used the examples of Ireland, Australia, US.
These are all countries that use tax breaks, so tax
eductions for contributions or tax seductions to allow you to
kind of make your gains tax free was designed. We
used employee er contributions to do it so by saying

(01:41):
as an employer, you've got to match the employee. That
was a way of saying, if you want that extra pay,
you've got to contribute to Kivsaber. Unfortunately, that was unwound
in two thousand and nine by the National Party with
the entrance of total immuneration policies. And what that means
now is for fifty percent of workers look to be blunt.
They're better off by not contributing to qvsaver and just

(02:03):
taking the cash because there is no incentive for them
to have their money locked up until they're sixty five.

Speaker 1 (02:07):
Now, this is just I mean, if we're honest about it,
this is going to depress wages, isn't it, Because instead
of giving you one hundred thousand dollars, they're just going
to take one hundred thousand dollars that's the available pay
and we're going to take the twelve percent off, give
you your money, and then top it back up. That's
what's going to happen.

Speaker 2 (02:23):
Edits, and there's no question on there. I don't debate
that for a second. However, we have to also acknowledge
we've got a retirement system that is completely at the moment,
we need to move retirement savings into being privately driven
versus driven by the state. So this is a hit
that's going to have to happen at some point. Middle
of a recession is at the right time to do it.

(02:43):
That's a different cool.

Speaker 1 (02:45):
Surely we're going to be out of the recession by
twenty thirty two.

Speaker 2 (02:48):
Well, we would hope, So twenty five meant to be
the Year of driving.

Speaker 1 (02:53):
Jeez. Honestly, shoot me now, Rupert, Thanks very much appreciated, Rupert,
Carline coder Wealth managing to exit.

Speaker 2 (03:00):
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