NZSA Disclaimer
KiwiSaver is approaching its 20th birthday. That’s worth celebrating.
It’s also been tweaked a lot, with roughly thirty small to meaningful changes so far. Think KiwiSaver 1.0, then 1.1, 1.2, and so on. More one-off tweaks are now being proposed by politicians.
But at 20 years old, KiwiSaver doesn’t need another tweak. It needs a destination.
One that sets out a clear long-term sequence of transitions, so we’re all clear on where we’re heading and can trust the path to get there. This is where the six-election test matters.
KiwiSaver’s greatest strength is its simplicity. Any renovation should preserve that: keep what works, respect the original design, but make a small number of long-dated changes for a world that no longer looks like 2007.
Every retirement system is built on assumptions. Many of ours were shaped around uninterrupted careers, steadily rising wages, and political continuity that, in practice, is hard to sustain over decades. A system built on those assumptions can look robust on paper and still quietly drift over time.
We often talk about KiwiSaver as a workplace product. In reality, it’s a lifelong system.
Working backwards, it needs to be adequate in retirement to complement NZ Super, which itself changes. To be adequate at retirement, it needs steady contribution momentum through working life, and arguably before that.
That brings us to one technical but important rule. The KiwiSaver Act links retirement withdrawals to the NZ Super eligibility age. But KiwiSaver belongs to the individual member. It is theirmoney and part of their own long-term financial planning.
The KiwiSaver withdrawal age should be its own setting. NZ Super moved from 60 to 65 between 1993 and 2001. KiwiSaver access should not drift further through political change elsewhere. Protecting access at 65 is an important first step in keeping individual KiwiSaver balances (and timing of retirement access) free from interference.
Now stepping back to the earliest life stage: from birth to 18.
This is where compounding could do the heaviest lifting, and yet participation is collapsing. Ten years ago, around 30% of under-18s had a KiwiSaver account. Today it’s about 15%. The average balance at 18 is roughly $3,000.
The removal of the $1,000 kick-start in 2015 appears to be a material influence in this reduction. Even when in place, the majority of young Kiwi’s did not access this, and it was most likely not accessed evenly across demographics.
Youth financial literacy also matters. Higher financial literacy leads to better financial behaviour. Programmes like Sorted in Schools (started in 2018 supported by the Retirement Commission) are a very positive step, now supported by recent Social Studies curriculum changes for year 1-10 students. However, financial literacy remains uneven.
So how could KiwiSaver 2.0 make financial literacy tangible? What if young Kiwis reached 18 with a working understanding of markets, compounding, and long-term investing, without teachers or parents needing finance degrees?
When it comes to youth enrolment, balances, incentives, equity and literacy, I think we can do better than that.
The next post follows Maia, born July 2027, and what KiwiSaver 2.0 could deliver for Maia if the system knew its destination from her arrival.
Fraser Whineray
Fraser is an Independent Non-Executive Director of Waste Management NZ, Quayside and AgriZero. Fraser’s experience includes CEO of Mercury and COO of Fonterra Co-operative, and in governance Tilt Renewables, Kotahi and Opus International Consultants. Fraser Chaired the Prime Minister’s Business Advisory Council in 2019. He is also a passionate advocate for the evolution of KiwiSaver. This article has been republished from a recent Linkedin post.