Source: Retirement Commissioner
The Retirement Commissioner is calling for cross-party action on the retirement income system – laying out a practical plan for what to do now while preparing for the challenges ahead.
New Zealand’s population is ageing. Work and caregiving patterns are shifting, home ownership is declining and KiwiSaver, now nearly two decades old, is maturing.
To better understand these challenges and where there are opportunities to improve the system, Te Ara Ahunga Ora Retirement Commission is required to undertake a triennial review of retirement income policies. It provides the Government with independent advice on how retirement income policies are performing and what changes might be needed.
The 2025 review draws on a substantial body of research, including 15 reports and a special edition of Policy Quarterly, and reflects the voices of older New Zealanders, the insights of experts and the values that underpin the retirement income system.
Retirement Commissioner Jane Wrightson says, “the review provides a chance to pause and take stock. It marks how far we have come, and where we need to go next.
“The message is clear. We need a long-term political accord to focus on providing certainty for future generations of retirees and stop piecemeal policy change,” she says.
“That means improved governance, inclusive policy and a retirement income system that works for everyone.”
The 2025 review makes 12 recommendations to the Government, including targeted policy reforms to address the most pressing gaps, particularly those affecting groups who have historically missed out or face barriers to participation.
This includes a recommendation to extend the Government’s KiwiSaver parental leave contribution to $1,000 per parental leave period, regardless of whether the member makes contributions.
The Retirement Commissioner also recommends increasing KiwiSaver government contributions to those on low incomes.
She would also like to see the removal of unnecessary KiwiSaver exclusions for people aged over 65 and those on a temporary work visa.
“These changes would better reflect the diversity of New Zealand’s workforce and align KiwiSaver with international best practice,” she says.
“If no extra funding is available, the recommendations in the 2025 review could be put in place at no additional fiscal cost to the Government by reallocating existing spending on the government contribution to where it will have the most impact.
“Although this approach would mean fewer people would receive the government KiwiSaver contribution, they would continue to receive support for their retirement through NZ Super, and through matched and increasing employer contributions to KiwiSaver.
“These actions are designed to improve adequacy, close savings gaps, and ensure the retirement income system remains fair, sustainable and trusted.”
The review also recognises that lasting progress depends on more than just short-term fixes. It calls for stronger stewardship and a more joined-up approach to managing the retirement income system as a whole. This includes building cross-party consensus, improving coordination across government and industry, and developing a long-term roadmap that sets out a clear direction for the next decade and beyond.
The Retirement Commissioner says, “by sequencing actions in this way, the review aims to deliver both quick wins and enduring benefits, supporting fairness, sustainability and public confidence in the retirement income system.
“The recommendations in the review are designed to work together as a package. We have identified a practical roadmap for the future, with targeted changes we can make now, such as improving KiwiSaver settings and extending support during parental leave, and reforms to strengthen long-term stewardship.”
Recommendations:
Actions we can take now – targeted policy reforms
Extend the government KiwiSaver parental leave contribution to $1,000 per parental leave period, regardless of whether the member makes contributions.
Increase Government KiwiSaver contributions for low-income earners.
Remove unnecessary KiwiSaver exclusions. Mandate employer contributions for people over 65. Allow those on temporary visas to join and receive matched employer and government contributions.
Ban the use of total remuneration policies in KiwiSaver employer contributions.
Actions we can take now – system improvements and innovations
Work with KiwiSaver providers and supervisors to strengthen the regular, anonymised reporting of balances, contributions and withdrawals (including hardship), and improve integration with other administrative data sources.
Improve administrative processes in KiwiSaver, including standardising and optimising hardship withdrawals, and updating payroll systems to better support employer contributions during parental leave.
Design and trial sidecar/emergency savings accounts.
Develop a nationally consistent decumulation framework.
Long-term system stewardship
Put in place a new retirement income cross-party accord.
Establish a Parliamentary working group to set the strategic direction for a 10-year retirement income roadmap.
Establish a pan-sector group, led by the Retirement Commission, to develop and implement the roadmap under the guidance of the Parliamentary working group.
Ensure the 10-year retirement income roadmap addresses KiwiSaver, NZ Super and innovation in retirement planning.
Download the full 2025 Review of Retirement Income Policies here: https://retirement.govt.nz/policy-and-research/2025-review-of-retirement-income-policies
Notes
The Commission estimates the Government will spend $545 million on KiwiSaver subsidies in the 2025/26 financial year. Assuming no additional funding is currently available, the Commission looked at ways to target government contributions to offset the costs to implement the proposed KiwiSaver reforms.
Making the recommended change for parental leave in the 2025 Review would cost $34 million. The cost of giving KiwiSaver to temporary visa holders is estimated at $40 million.
Stopping the use of total remuneration packages isn’t expected to cost the government directly (outside of as an employer).
That would leave a possible $471 million that the Commission believes should be prioritised for those on lower incomes, given the annual contribution of $260.72 is more significant for these workers than those on higher incomes. The wider discussion of the appropriate role and amount of the Government contribution in the future would form part of the roadmap work.
In this modelling, people would stop getting the government contribution once their income goes over a set limit, although the contribution could be reduced gradually instead. This would need to be checked to see how it affects matters like tax rates.
MIL OSI
