An attack of common sense? Significant support for making Kiwi Saver compulsory

After decades of nonsense politicking at the cost of hundreds of billions of dollars in superannuation savings, has New Zealand had an attack of common sense?

Last week, National made a stunning announcement that I never thought I would hear from the main conservative party in New Zealand. Superannuation will be compulsory from 01 July 2028.

It follows a New Zealand First announcement in May to make Kiwi Saver compulsory from birth.

The announcement by National is contrary to the approach of its major ideological ally, A.C.T., which insists that the superannuation age needs to rise. The A.C.T. policy is to gradually raise across a decade, by two months a year, the retirement age to 67. Its
Time to Face Reality on Super policy, announced in 2022 is intended to bring $16.02 billion in savings by 2034.

It is a major reversal of National Party policy that saw compulsory superannuation abolished shortly after Robert Muldoon became Prime Minister in 1975. Analysis of the potential savings pool New Zealand would have created had this not happened, suggest that we would have $620 billion or more in savings by now, and would be one of the richest countries in the O.E.C.D.

I have written about this absurdity in past columns. However, it is worth noting, just in the oft chance that someone in a position of power may have finally connected the dots as to why this country is slipping socio-economically. And where superannuation comes into the equation.

The announcement now puts pressure on Labour, which so far has been sending out mixed messages about its policy. From a Labour perspective, the pressure is not helped by Opportunity Party saying that – should they get into Parliament – they will support whomever commits to making Kiwi Saver compulsory. Opportunity will go one step further and end tax deductions to Kiwi Saver savings.

The Green Party policy appears to be keeping the age at 65, supporting universal superannuation and offering assistance to those in retirement villages through an overhaul of the legislation governing how R.V.’s are run. The Green Party proposes to fund this through a 2.5% tax on net assets excluding the family home that exceed $10 million.

And what of Te Pati Maori? At this time, it appears that they are backing their 2023 policy of Maori being eligible for superannuation as early as 57-58, noting life expectancy. T.P.M. say that gap on the current eligibility age would decrease as life expectancy improves.

It would be great if, after decades of politicking Parliament decide to face reality on superannuation. Politicians frequently talk about fiscal holes. To me, potentially the biggest fiscal hole we had is the one created when Mr Muldoon cancelled compulsory super in 1975. Are we truly prepared to finally acknowledge the single biggest fiscal screw up of the last two generations?

I hope so.