Press Release – Financial Services Council
The Financial Services Council is hosting a high level, one day conference on October 14 in Auckland, drawing on international experience of state and individual funded pensions and New Zealand learnings to discuss how to super-size savings to double …
10 October 2013
Future of Super Conference to Offer Solutions to Super Size Retirement Incomes
The Financial Services Council is hosting a high level, one day conference on October 14 in Auckland, drawing on international experience of state and individual funded pensions and New Zealand learnings to discuss how to super-size savings to double retirement incomes.
The FSC will unveil a package of options at the Future of Super conference for policymakers to consider as the basis for a new cross party Retirement Income Policy agreement, updating the old 1993 accord. The aim is to find ways to make KiwiSaver fairer, more accessible, affordable and sustainable so all New Zealanders can save to buy a second pension and live a comfortable retirement.
“The harsh truth is that New Zealanders consider a comfortable – not lavish – retirement income to be about double New Zealand Super which is $357 a week for an individual living alone. On the current policy settings people need to save 10% of their income every year over 40 years from age 25. If you wait till you are 55 to start then you’ll need to save 50% of your income to have sufficient to buy a second pension and achieve the comfortable retirement income level,” says FSC CEO, Peter Neilson. “People are simply not saving enough although we know from the research we have conducted with middle New Zealand that most people want to save and save more but say they either can’t afford it or haven’t got round to it.
“Reality will bite despite good intentions because people generally underestimate their longevity, particularly the number of years they’ll have in retirement, and they are likely to outlive their savings.”
The FSC’s options for enabling New Zealanders to save to provide the desired comfortable income that is double NZ Super will provide policymakers with research-supported scenarios on how to:
• Leave NZ Super as is to provide stability and surety
• Lift KiwiSaver contributions and coverage progressively over a number of years so that most New Zealanders could fund a second pension for a comfortable retirement
• Reduce the taxes on KiwiSaver retirement savings so KiwiSavers are not disadvantaged compared to other investment options
• Move more KiwiSavers out of default conservative funds into balanced or growth funds to match their needs and life stage (and the potential for reviewing fee structures as the savings pool grows)
• Possibly introduce insurance to guarantee a level of savings at retirement.
Conference speakers also include OECD Private Pensions Unit Member, Stéphanie Payet, who will talk about policy trends in OECD countries to increase coverage and contributions into funded pension plans. Former New South Wales state Liberal Leader and current CEO of the Australian Financial Services Council, John Brogden, will present a case study on how our neighbours have built up retirement savings of A$1.6 trillion from their 20-year-old and evolving compulsory Superannuation Guarantee scheme. New Zealand scrapped compulsory retirement savings in 1975, a decision 73 per cent of New Zealanders now regret.
The conference will also feature discussions on how best to combine Pay as You Go schemes (PAYGO) like KiwiSaver and Save as You Go schemes (SAYGO) like NZ Super, research findings on Kiwis’ hopes, fears, needs and being resigned to KiwiSaver becoming compulsory as not a bad thing either, panels on how to make KiwiSaver affordable, fairer and more accessible for women who spend more time out of the paid workforce and also for employees, especially the low paid, and employers. The day will finish with expert presentations on the need for an annuity, retirement pension or drawdown facility market in New Zealand and a networking event.
To register for the conference and find out more about the programme go to www.fsc.org.nz