Overwhelming public support for compulsory super savings

A May 18 to June 8 Horizon Research poll of 3177 adult New Zealanders commissioned by the Financial Services Council (FSC) finds:

• 74% think New Zealand should, over time, introduce retirement savings scheme in which contributions by both employees and employers are compulsory. 17% were either neutral or unsure and only 9% oppose the idea.
• 72% support the FSC suggestion of increasing savings contributions to reach 10% year (5% from employees, 5% from employers).

Graeme Colman, principal of Horizon Research, says the survey showed that support for compulsory superannuation savings was consistent across all salary bands with 76% support among those on $20,000 to $50,000pa. Support from business proprietors and the self employed was slightly less at 67%.

In terms of how compulsory contributions might be phased in: 

• 52% support the idea of contribution increases of 0.5% each year by the employee and employer over 10 years, until the total each year reaches 10% of an employee’s income (the approximate amount it is believed people will need to save to double what they will be receiving from NZ Super).

FSC chief executive Peter Neilson (pictured) says the research shows overwhelming public support to not only keep NZ Super, but to start using savings to ensure any KiwiSaver participant, and particularly those aged under 40, can live comfortably in retirement. For those under 40, the FSC proposes scheme which will more than double the current income provided by NZ Super. At the same time the FSC wants the NZ Super entitlements to remain the same for all those close to retirement or receiving it now.

Neilson says the survey shows parties in Parliament would have their voters’ support if they move to consider new retirement savings options. Some 73% of people who voted National at the 2011 general election think making KiwiSaver compulsory would be in New Zealand’s best interests. Support among other parties’ voters was: 66.3% Labour, 70.1% Green, 74% NZ First, 60.1% Maori Party and 79.5% Mana.

The FSC has not taken position on whether savings contributions by employees and employers should be voluntary or compulsory. It says this is decision for the public and politicians to make. However, it raised the idea for public debate in major report released on Sunday June 17.

The FSC suggests the issue should be considered by new all-party Parliamentary Select Committee on Retirement Income Security which would oversee the development and passage of new retirement income policy. The FSC suggests the committee gather reports from officials and others, issue discussion document, consult with the public, and come up with new long-term retirement income bill by the end of 2013. If that bill is passed with less than 75% support from MPs it suggests the law should be the subject of referendum in 2014.

• The FSC report on future retirement options is available at www.fsc.org.nz.

• This issue is being discussed on: Facebook and Twitter

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