Reform Kiwi Saver - let the power of compounding work

Reform Kiwi Saver - let the power of compounding work

Abolish all default kiwi saver providers and replace with a fee free (or very low fee) government scheme that invests in low cost index funds only. The government scheme would provide a variety of funds based on risk. People automatically enrolled would be matched to up to the appropriate fund based on age i.e. a 25 year old would be invested in a high risk (90-100% equity fund). When an auto enrolled person gets close to retirement age they are transferred to a more conservative fund. The future value this would generate for New Zealanders in aggregate would be staggering for relatively little cost to implement. Other things to consider/comments: Any account that has been automatically enrolled into a default provider would be transferred to the new government scheme. Only losers from this plan is the financial services industry. Extremely easy to show that in aggregate they are a liability plus people still have the right to invest with them. Make Kiwisaver compulsory and replace the 1st home buyer withdrawal with another form of government support.

Showing 11 reactions

  • Alan Dawn
    commented 2016-11-27 21:18:12 +1300
    Are you suggesting that the default scheme be Government run and other providers be private, investor selective? Maybe, but what’s the point? Compounding is there regardless. Better to have financial literacy taught in schools as per another post.
  • Alan Dawn
    tagged this with interesting 2016-11-27 21:18:12 +1300
  • Tim O’Donnell
    commented 2016-11-26 21:29:23 +1300
    Seems like a solution for a problem we don’t have. I don’t see anything wrong with the current scheme. I see many problems with people blaming the government in the future & demanding compensation for some slight or another at a cost to the rest of the tax payers with this idea.
  • Tim O’Donnell
    tagged this with dislike 2016-11-26 21:29:22 +1300
  • Alan Barraclough
    commented 2016-11-26 17:34:38 +1300
    Really disagree.. once its government held .. in one place.. a future government would just not be able to stop themselves dipping their hands into it. or using it to prop up some local initiative.. or even perhaps steal it.. see recent news from a south east asian country.
  • Alan Barraclough
    tagged this with dislike 2016-11-26 17:34:37 +1300
  • David ten Have
    tagged this with low priority 2016-11-26 05:03:09 +1300
  • Ben Mayson
    tagged this with interesting 2016-11-26 03:50:43 +1300
  • Richard Wyles
    tagged this with dislike 2016-11-26 02:26:22 +1300
  • Richard Wyles
    followed this page 2016-11-26 02:23:01 +1300
  • Michael Kean
    published this page in Suggestions 2016-11-26 00:12:14 +1300