Govt News – Retirement Commission joins forces with financial sector to get New Zealanders saving

Source: Retirement Commission

The financial services industry has come up with a set of recommendations to work together on to encourage more New Zealanders to save as part of the 2022 Review of Retirement Income Policies.

This was the first time the Government has included a specific term of reference for the industry to undertake in the triennial review and were asked to explore new non-government initiatives to encourage people to save in a complex COVID-19 environment.

New Zealand has had consistently low household savings rates over the last two decades compared to international counterparts in the OECD. A 2021 Te Ara Ahunga Ora Retirement Commission survey found 58% of New Zealanders couldn’t cover an unexpected expense equivalent to one month’s income, with 33% of people needing to borrow within the first three months if their income were to drop by a third.

Banks and industry have rallied together to contribute ideas, with an expert working group set up made up of representatives from partners of the National Strategy for Financial Capability, including New Zealand’s five largest banks.

David McLean, former chief executive of Westpac and former chair of the NZ Bankers’ Association, was asked by Retirement Commissioner Jane Wrightson to chair the group, and says it makes sense that the industry work together in considering solutions to the financial problems facing Kiwis.

“The group has prompted a new dialogue in the sector, where organisations are looking at their individual values and seeing that ultimately, they all share an ambition to improve New Zealanders’ financial wellbeing,” he says.

“A key learning has been the need for shared insights, data and impact measures across the industry to truly understand what is and isn’t working.”

The group have made several recommendations in the Encouraging Savings Report, including the development of a shared resource platform capturing research and insights across the financial services industry – a project already in the pipeline for the National Strategy for Financial Capability.

Another recommendation was for banks, including CEOs, to meet at least once a year, to report on how they are using behavioural insights, research, and open banking systematically to incentivise positive financial behaviour for their customers. The group recommend that if this doesn’t happen, the Government should step in to regulate it under the Conduct of Financial Institutions (CoFI).

Retirement Commissioner Jane Wrightson says the group had proved there is a strong appetite among the sector to improve the financial positions of New Zealanders.

“Our National Strategy is nothing without the buy-in, involvement and commitment of the financial services industry. We can see that this community is really driven to help New Zealanders, and as a collective they are capable of making changes that have a real impact.”

Other private saving recommendations in the 2022 Review of Retirement Income Policies include an emergency savings ‘sidecar’ linked to KiwiSaver, driving forward open banking and having products that are culturally appropriate for Māori and Pacific peoples.

The Retirement Commissioner released her final recommendations for the 2022 Review of Retirement Income Policies this week endorsing the suggestions made by the working group and recommending they are actioned.

MIL OSI