Universal compulsory KiwiSaver from birth and increased government contributions

What is KiwiSaver?

KiwiSaver is a voluntary, government-backed savings scheme designed to help New Zealanders save for their first home or retirement. When you join, you contribute a percentage of your salary, your employer matches this, and the government adds a small annual contribution. The money is invested in funds managed by providers like banks or investment companies. The "kick-start" refers to a one-off $1,000 payment the government used to provide to new members, which was discontinued in 2019.

Current Situation

This petition responds to growing concerns about financial security in New Zealand. According to the Ministry of Business, Innovation and Employment (MBIE), housing affordability remains a major challenge, with median house prices significantly higher than median incomes. Additionally, inflation has reduced the real value of savings, and many New Zealanders worry they will not have enough money to retire comfortably. The current system is voluntary, meaning many low-income earners or those in precarious employment do not participate, potentially leaving them without adequate retirement funds.

Arguments in Favour

• Compound Growth: Starting savings at birth allows decades of compound interest to work, potentially creating substantial wealth by the time the individual reaches retirement age.
• Equality: A universal system ensures every child, regardless of their parents' income, has access to long-term wealth building tools.
• Reduced Welfare Pressure: Better retirement savings could reduce future reliance on the New Zealand Superannuation and other welfare payments, easing pressure on the public budget.
• Financial Resilience: The reinstated kick-start and higher government contributions would provide a stronger safety net for young people entering the workforce.

Arguments Against

• Loss of Choice: Critics argue that compulsory enrolment removes personal financial freedom and forces people into a system they may not want or understand.
• Cost to Employers: Making contributions compulsory from birth or increasing rates could raise labour costs for businesses, potentially impacting job creation or wages.
• Administrative Complexity: Managing accounts for every newborn from birth would require significant new infrastructure and administrative resources for the government and providers.
• Market Distortion: Critics suggest that forced savings might not be the most efficient way to address housing or retirement issues compared to other policy levers like tax reform or housing supply.

Relevant Context

Currently, KiwiSaver is opt-in. The $1,000 kick-start was removed in the 2019 Budget to save government money. The New Zealand Superannuation age is gradually increasing from 65 to 67. This petition affects all New Zealand citizens and residents, particularly families with young children and employers who would need to comply with new contribution rules. It is important to note that any such change would require significant legislative reform and likely a long implementation period.

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