Quick Bite: Does KiwiSaver need higher contribution rates?

Is KiwiSaver better off with policy stability or is it overdue for comprehensive reform? Matt MacPherson from Sharesies & Chris Di Leva of Harbour Asset Management debate whether potential cuts to government contributions would impact participation rates.

 Plus - how many investors would support higher KiwiSaver contributions in a cost of living crisis?

This clip is taken from our previous episode "Investing in US markets via KiwiSaver". For more or to watch on YouTube—check out http://linktr.ee/sharedlunch

If there are any companies, sectors, or topics you'd like to see on Shared Lunch, flick us an email at [e-mail] to let us know.

Investing involves risk. This episode is brought to you by Sharesies Limited (NZ) in New Zealand.

Information provided is general advice only and current at the time and does not take into account your objectives, financial situation and needs. We do not provide recommendations and you should always read the product disclosure documents available from the product issuer before making a financial decision.

Sharesies Investment Management Limited is the issuer of the Sharesies KiwiSaver Scheme. For the Product Disclosure Statement and to find out more about the Sharesies KiwiSaver Scheme go to http://sharesies.nz/kiwisaver 

Our disclosure documents, including a Target Market Determination for Sharesies, can be found on our website at https://sharesies.com.au/disclosures. If you require financial advice, you should seek advice from a qualified financial advisor. The views expressed by individuals are their own and Sharesies does not endorse any of the guests or the views they hold.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:01):
You're listening to a shares These podcast. We've got the
budget coming up there. If you like rumors that the
government might cut its contribution, which is five hundred plus
dollars a year, Chris, do you think that's going to
have any effect at all?

Speaker 2 (00:18):
I'm not sure it will on key we saber participation
because key we saver fulfills a few key functions.

Speaker 3 (00:26):
You know.

Speaker 2 (00:26):
One, it's really well regulated and people get accessed to
a wide range of investments right some some lower cost
and more passive, and some high cost and more active.
So I think it's working really well, and most people
I talk to are really positive about key we Saver. Second,

(00:47):
obviously you still get your employer contribution, which is as meaningful.
Might not be quite as high as Australia, but it's
still meaningful. I thing like it for people, So I
think overall it would be a shame. Don't get me
wrong to see changes, because I think what makes schemes
popular is actually when they're largely left alone by politicians

(01:11):
so people can invest with confidence.

Speaker 3 (01:14):
Might take almost sorry, Christ, I must take the opposite. Yeah,
I think we're overdue for a policy review. Keep Saver
We're only a tiny little scheme, but I think we've
tried to be as vocal as we can. I'll come
back to agreeing with Chris now. With the government contribution
is that it's not targeted anyway, and what I'd like
to see actually is targeted and targeted at the people

(01:37):
that are being left behind. And I mentioned self employed before,
and you mentioned the kickstart and children. The fact that
the government contribution is not available to anyone under eighteen
seems contrary to good sense, which would be to get
people involved in Keepsaver as early as possible and incentivize that,
and incentivize people who are self employed because they are

(02:03):
not receiving the having if they receive an employer contributions
coming out of their own pocket twice and so you know,
there's I think let's have a look at the policy settings.
But I do take your point that the more that
you that you kind of mess around with it, So
any changes need to be really well signaled.

Speaker 2 (02:21):
Oh look, and I'm more thinking about messing with it
in a negative way, and I want to mess with
it in a positive way. Around higher contributions.

Speaker 1 (02:30):
We've actually looked at that ourselves.

Speaker 3 (02:32):
Haven't we met what we heard when we got involved
in kipsab is industry saying that contributions need a rise,
and we heard the Retirement Commission say largely the same thing.
But the voice that was kind of missing from that
was the people who were going to have to make
the higher contributions, and that's you and me, that's the members.

(02:55):
So we went out and asked a bunch of our investors,
not out necessary keep we Saver members, but just people
on the Cheesies platform. It was overwhelming how many people said,
I get it, I'd prefer to have a little bit
less in my take home this week in order to
have more retirement. It was seventy eight percent who supported
that idea, which is phenomenal because it's counter to everything

(03:21):
that we assumed people would think. Like at the height
almost of the cost of living crisis, investing involves the
risk you might lose the money you start with.

Speaker 2 (03:32):
We recommend talking to a licensed financial advisor.

Speaker 1 (03:35):
We also recommend reading product disclosure documents before deciding to invest.