1 00:00:00,520 --> 00:00:03,080 Speaker 1: Heller Duper see Ala Simon Brown is with us actually 2 00:00:03,160 --> 00:00:06,160 Speaker 1: ten past five on that. Now, the Retirement Commissioner has 3 00:00:06,160 --> 00:00:08,879 Speaker 1: made a series of recommendations for changes to key we saver. 4 00:00:09,480 --> 00:00:13,040 Speaker 1: The analysis has recommended default contribution rates should go from 5 00:00:13,039 --> 00:00:15,280 Speaker 1: where they are right now, which is three percent to 6 00:00:15,480 --> 00:00:19,000 Speaker 1: four percent, with employers being required to match at that level, 7 00:00:19,320 --> 00:00:21,840 Speaker 1: but the Commission stopped short of recommending key we saber 8 00:00:21,920 --> 00:00:24,880 Speaker 1: be made completely compulsory. Michelle Rayes is the policy lead 9 00:00:24,920 --> 00:00:29,000 Speaker 1: at the Retirement Commissioner. Commission rather Heimershelle hi Herbert. Why 10 00:00:29,000 --> 00:00:30,840 Speaker 1: not compulsory? 11 00:00:31,080 --> 00:00:33,159 Speaker 2: Well, I think the evidence shows us that it's not 12 00:00:33,200 --> 00:00:36,360 Speaker 2: really necessary. We've got very high levels of membership. The 13 00:00:36,400 --> 00:00:39,000 Speaker 2: scheme's being very effective in getting people to join, and 14 00:00:39,040 --> 00:00:41,960 Speaker 2: when we look at contributing members we see that almost 15 00:00:42,080 --> 00:00:44,159 Speaker 2: all of the people who are in paid employment are 16 00:00:44,200 --> 00:00:48,280 Speaker 2: actually contributing already, So compulsion isn't really necessary. 17 00:00:48,520 --> 00:00:51,360 Speaker 1: Really, what proportion of people in paid employment are are 18 00:00:51,440 --> 00:00:53,360 Speaker 1: contributed Well. 19 00:00:53,200 --> 00:00:56,040 Speaker 2: Those that are paid employees, so those are waging salary earners, 20 00:00:56,080 --> 00:00:59,120 Speaker 2: about ninety percent of them are actually currently contributing to 21 00:00:59,160 --> 00:01:01,480 Speaker 2: the scheme. And when we look at more broadly as 22 00:01:01,720 --> 00:01:05,640 Speaker 2: the population that includes self employed that dropped to about eighty percent. 23 00:01:05,760 --> 00:01:08,480 Speaker 1: And why not make it compulsory to scoop up that 24 00:01:08,560 --> 00:01:09,279 Speaker 1: last ten percent? 25 00:01:10,560 --> 00:01:13,960 Speaker 2: Well, I think that there are downfalls to forcing people 26 00:01:14,000 --> 00:01:16,640 Speaker 2: to say, you know, some people on very low incomes 27 00:01:17,360 --> 00:01:20,240 Speaker 2: will actually not necessarily be better off if they give 28 00:01:20,319 --> 00:01:23,880 Speaker 2: up current well being for some future time period. So 29 00:01:23,920 --> 00:01:25,720 Speaker 2: we just want to give a little bit more flexibility 30 00:01:25,760 --> 00:01:27,320 Speaker 2: to people to make their own decision. 31 00:01:27,760 --> 00:01:30,240 Speaker 1: Obviously we don't you know, you don't have to make 32 00:01:30,280 --> 00:01:32,720 Speaker 1: it compulsory for the worker, but you can make it 33 00:01:32,720 --> 00:01:34,920 Speaker 1: compulsory for the employer. Why not do that? 34 00:01:36,000 --> 00:01:37,600 Speaker 2: Yeah, So that's one of the things that we do 35 00:01:37,680 --> 00:01:40,640 Speaker 2: think some consideration should be given to. We know that 36 00:01:40,680 --> 00:01:44,440 Speaker 2: in other jurisdictions, you know, employer contributions are compulsory. So 37 00:01:44,520 --> 00:01:46,560 Speaker 2: that's something that we have recommended that the government might 38 00:01:46,600 --> 00:01:47,680 Speaker 2: give consideration too. 39 00:01:48,400 --> 00:01:53,080 Speaker 3: Why not call for it, as I suppose, there's always 40 00:01:54,160 --> 00:01:56,280 Speaker 3: one needs a bit of a broader analysis before you 41 00:01:56,320 --> 00:01:59,120 Speaker 3: make these kind of calls, because there are broader economic 42 00:01:59,160 --> 00:02:03,040 Speaker 3: impacts that come up of compulsory settings, like what. 43 00:02:04,800 --> 00:02:08,640 Speaker 2: They can impact on wage levels generally within their economy, 44 00:02:09,280 --> 00:02:13,079 Speaker 2: sometimes the economic productivity, so there's border issues at play. 45 00:02:13,200 --> 00:02:14,080 Speaker 2: They needed to be technique. 46 00:02:14,120 --> 00:02:16,480 Speaker 1: I mean, for example, if you force an employer to 47 00:02:16,480 --> 00:02:18,360 Speaker 1: make a key, we save a contribution on behalf of 48 00:02:18,360 --> 00:02:20,960 Speaker 1: the employee, they may in fact dock the employee's pay. 49 00:02:22,120 --> 00:02:25,560 Speaker 2: Yeah, that is one of the scenarios that can result, right. 50 00:02:26,200 --> 00:02:28,520 Speaker 1: Am I right in thinking that the employer over in 51 00:02:28,520 --> 00:02:31,440 Speaker 1: Australia has to put something like eleven percent in for 52 00:02:31,480 --> 00:02:31,960 Speaker 1: the worker. 53 00:02:33,080 --> 00:02:36,080 Speaker 2: Yes, that's correct. Yeah, they've been increasing their contributions over 54 00:02:36,120 --> 00:02:37,800 Speaker 2: the past number of years. I think it is currently 55 00:02:37,800 --> 00:02:38,720 Speaker 2: at about a leven percent. 56 00:02:38,960 --> 00:02:40,919 Speaker 1: So why don't we get real? I mean we're talking 57 00:02:40,919 --> 00:02:42,960 Speaker 1: here about raising it from three to four percent. That's 58 00:02:42,960 --> 00:02:45,120 Speaker 1: typically winks. When you're comparing it to eleven percent or 59 00:02:45,120 --> 00:02:47,200 Speaker 1: over in Australia, those guys are loaded. Shouldn't we be 60 00:02:47,200 --> 00:02:48,280 Speaker 1: doing the same as them? 61 00:02:48,960 --> 00:02:50,799 Speaker 2: Well, I think that's the first thing to notice. When 62 00:02:50,840 --> 00:02:52,320 Speaker 2: we say four percent, that would be with a four 63 00:02:52,320 --> 00:02:55,440 Speaker 2: percent employer match, so it's actually an eight percent contribution 64 00:02:55,560 --> 00:02:57,959 Speaker 2: we're talking about. And the other thing to remember is 65 00:02:57,960 --> 00:03:00,440 Speaker 2: that New Zealand's quite different from Australia because we have 66 00:03:00,760 --> 00:03:05,040 Speaker 2: New Zealand Super so that is a universal pension payment 67 00:03:05,080 --> 00:03:09,640 Speaker 2: which isn't in place in Australia. So in a way 68 00:03:09,960 --> 00:03:11,840 Speaker 2: people won't have to save as much out of their 69 00:03:11,840 --> 00:03:14,400 Speaker 2: current income because of the fact that New Zealand super 70 00:03:14,440 --> 00:03:16,640 Speaker 2: is available to them as retirement income stream. 71 00:03:16,760 --> 00:03:20,400 Speaker 1: Yeah, fair point. Hey, are you worried about our savings culture? 72 00:03:20,440 --> 00:03:22,480 Speaker 1: I mean, how on earth have we got people who 73 00:03:22,560 --> 00:03:24,560 Speaker 1: in some cases only got one hundred bucks in their 74 00:03:24,600 --> 00:03:25,880 Speaker 1: bank account at the end of the month. 75 00:03:27,400 --> 00:03:29,399 Speaker 2: Yeah, I think you know, that is concerning. I think 76 00:03:29,400 --> 00:03:31,040 Speaker 2: that probably is a bit of a function of the 77 00:03:31,040 --> 00:03:34,560 Speaker 2: current economic climate that we're in at the moment. But yeah, 78 00:03:34,600 --> 00:03:37,600 Speaker 2: it is something that concerns us just generally savings culture. 79 00:03:38,160 --> 00:03:41,880 Speaker 2: It's something that we, you know, are pushing for people 80 00:03:41,920 --> 00:03:45,480 Speaker 2: to come think about their future selves when they make 81 00:03:45,560 --> 00:03:48,800 Speaker 2: decisions about current spending as well. But yeah, it is 82 00:03:48,800 --> 00:03:50,040 Speaker 2: a concern more generally. 83 00:03:50,280 --> 00:03:52,000 Speaker 1: I mean, Michelle, there's not a lot you can do. 84 00:03:52,080 --> 00:03:55,200 Speaker 1: If somebody is just you know, living kind of paypack 85 00:03:55,240 --> 00:03:57,640 Speaker 1: it to pay pack it, that that is what will happen, 86 00:03:57,680 --> 00:03:59,840 Speaker 1: and you know, you just hope for the best for them. 87 00:04:00,160 --> 00:04:02,280 Speaker 1: But do we have examples of people who are actually 88 00:04:02,280 --> 00:04:04,320 Speaker 1: on a reasonable wicket who still don't save. 89 00:04:06,600 --> 00:04:10,880 Speaker 2: Yeah, Unfortunately we don't have quite that level of what's 90 00:04:10,880 --> 00:04:12,880 Speaker 2: a this aggregation and the data or the ability to 91 00:04:12,880 --> 00:04:14,440 Speaker 2: break down to have a look at those kind of 92 00:04:14,480 --> 00:04:18,800 Speaker 2: levels of analysis. So we're not one hundred percent sure 93 00:04:18,880 --> 00:04:21,279 Speaker 2: of that at the moment, but there probably are, you know, 94 00:04:21,360 --> 00:04:24,800 Speaker 2: instances where people aren't necessarily saving as much as they should. 95 00:04:25,080 --> 00:04:27,679 Speaker 2: I think the beauty of kiwisaver is how it works 96 00:04:27,720 --> 00:04:30,280 Speaker 2: as an opt out system and the default settings. All 97 00:04:30,320 --> 00:04:33,360 Speaker 2: of that helps play into the behavioral factors that we 98 00:04:33,440 --> 00:04:36,960 Speaker 2: know are at play when people save. So we know 99 00:04:37,000 --> 00:04:39,640 Speaker 2: that keV saver's working quite well then in capturing people 100 00:04:40,160 --> 00:04:43,240 Speaker 2: who otherwise might not be saving just because of things 101 00:04:43,320 --> 00:04:47,040 Speaker 2: like you know, procrastination and inertia. So people get into 102 00:04:47,040 --> 00:04:49,120 Speaker 2: the schema that don't opt out of it. So that's 103 00:04:49,560 --> 00:04:52,440 Speaker 2: a good outcome in terms of people saving for their 104 00:04:52,480 --> 00:04:53,040 Speaker 2: future self. 105 00:04:53,279 --> 00:04:56,200 Speaker 1: Michelle, thank you very much, really appreciated as Michelle Rayer 106 00:04:56,560 --> 00:05:00,880 Speaker 1: of the Retirement Commission. For more from hither, see Allen Drive. 107 00:05:01,040 --> 00:05:04,360 Speaker 1: Listen live to News Talks it B from four pm weekdays, 108 00:05:04,560 --> 00:05:06,760 Speaker 1: or follow the podcast on iHeartRadio.