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What is a "Savings Culture" for if not increasing savings?

When KiwiSaver started I said I was quite happy to take the tax break. Don Brash thinks KiwiSaver was a bribe by the last Labour Government to middle New Zealand - effectively a tax-break from a government with an ideological aversion to giving them. He questions whether it has increased savings at all. At the time a number of commentators said that all it would do is move savings around, rather than increasing them. The evidence for increased saving appears slight, the evidence for poverty reduction contrary, and the evidence for economic benefits very weak.

I have also criticised the inherent contradiction in the way KiwiSaver is regulated. One the one hand it is so good, clear, and simple, that people can be defaulted into it. On the other hand it is so complicated, serious, and important that only an AFA providing a personalised advice service can sell one. If the FMA is right, and their arguments about the long term value of the scheme are pretty good, then government must be wrong.

So we should at least consider the merits of the scheme. Reviews do no harm. But there are a number of issues which need consideration - such as shifting the retirement age to 70. Something John Key says will not happen on his watch. Hmmm... given what has gone on with longevity, and lengthening of working life, his position looks increasingly wrong-headed. But perhaps a review of KiwiSaver could help with this problem - it is, after all, really our money. Maybe we could have that whenever we want to retire, and they can pay us New Zealand Superannuation when they think we should retire.

Lastly, it is interesting to read all the comments about the "savings culture" which has been created by KiwiSaver. Five years on, I question this. If a "savings culture" has been created, but no actual increase in savings, then what is it good for?

 

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