Flexible KiwiSaver role suggested

KiwiSaver members should be allowed to withdraw money from their accounts to buy rental properties, not just first homes, the retirement commissioner has suggested.

Acting commissioner Peter Cordtz said it was one suggestion up for discussion in the threeyearly review of retirement policies. He will present recommendations to the Government at the end of the year.

Cordtz said home ownership had declined over the past 30 years from about 78 per cent in the 1980s to 55 per cent.

Ma¯ ori and Pasifika had fared the worst – today only 35 per cent of Ma¯ori and 20 per cent of Pasifika own their own homes.

That can be a problem for people at retirement. About 12 per cent of people aged over 65 are tenants. The cost to taxpayers of the accommodation supplement paid to people aged over 65 has increased 92 per cent in the past six years, from $88 million in 2013 to $170m in the year ended March. Cordtz said the pension was not designed to cover the cost of renting. He said allowing some people to purchase an investment property as their first step could help more people into their own homes over the long term.

‘‘If we can get more people on the property ladder earlier, there may be less liability to taxpayers later.’’ At the moment, buyers have to live for at least six months in a house they use KiwiSaver money to buy.

But Cordtz said he had heard that the cost of housing in Auckland, Wellington and Tauranga made it difficult for some people to take that step.

‘‘If they could buy a property in a more affordable part of the country, they could use it as an investment to progress on the property ladder or simply to retire to one day,’’ he said.

He said the idea originally came from a Ma¯ori mortgage broker who was trying to help clients buy property near wha¯nau in areas other than where they worked. ‘‘We see this as an idea that could help a lot of New Zealanders get on the property ladder and create a long-term investment to aid retirement.’’

KiwiSaver withdrawals to finance first homes have risen steadily – in the year to June nearly $1 billion was withdrawn by first-home buyers, up from $870m last year.

He said that since the Government had shifted away from the idea of a capital gains tax on residential property, it was one of the best long-term investments people could make to fund their retirement.

But economist Cameron Bagrie wasn’t impressed. He said that if the withdrawal criteria were relaxed, it would soon lead to people suggesting KiwiSaver should be accessed for other asset classes. ‘‘What about someone who wants to buy a farm?’’