What’s killing our savings plan?
KiwiSaver. It’s a New Zealand treasure.
Introduced by the Clark Labour Government in 2007, KiwiSaver was part of a forwardthinking plan to make sure we will all be able to live a comfortable retirement.
It wasn’t a policy for the hereand-now. It was, typically for that Government, a policy for the future. Its greatest impact was always going to be felt long after the members of that Government had departed from political life.
KiwiSaver has been an unmitigated success. Despite some watering down by the current Government, it remains the most successful action New Zealand has taken to improve our rate of saving.
With over 2.6 million members, nearly 73 per cent of Kiwis aged under 65 have a KiwiSaver account. KiwiSaver investments total over $28 million. But something is going wrong. More and more working Kiwis are taking ‘‘holidays’’ from making contributions to KiwiSaver.
The number of people taking a contribution holiday has increased by 14 per cent. That is a big jump, but in an environment when household debt is at record levels and wages for most people are stagnant, it shouldn’t be a surprise.
Having a job, working hard and saving should give us all confidence that we will be able to build a better future for ourselves and our families. But for too many of us work is not even paying the bills.
A few weeks ago I attended the Manawatu Home Budgeting Service AGM.
I asked if they were seeing any changes in the types of people accessing their service. The answer was yes – working people make up a greater proportion of the people they see. It’s a similar story at the Salvation Army who increasingly support working people with food from their foodbank and support to find housing.
The gap between what people earn and what things cost has grown to insufferable proportions.
Over the past few months, Palmerston North house prices have begun to rocket upwards and even rents are rising beyond incomes. The number of people on the waiting list for a state house in our city has quadrupled in the past six months.
We can pretend that wages are rising fast enough to cover costs. We can ignore the fact that measures like the CPI leave out housing costs. Or we can commit to a plan to lift wages, control house prices and give people the chance to live well. The choice is in our hands.
For too many people, working hard is not paying the bills, compromising Kiwisaver contributions.