Quite a well-known chief executive and finance guy told me once that, in business, you should always make use of other people’s money first.

Which is exactly what the Government is doing with the KiwiSaver changes announced in yesterday’s budget.

It wants more of our money going in from our wages and salaries and less of its money going in through government contributions. Although, that’s our money too when it comes down to it.

But the gist is, the minimum contributions are going to increase from 3 percent to 4 percent and the bit the Government chips in each year is halving - from a maximum of $520 to a maximum of $260.

The change in what we pay-in to our KiwiSaver is going to be somewhat gradual. From April 1 next year, the rate will shift to 3.5 percent, before increasing again in April 2028 to 4 per cent.

But if you’re earning more than $180,000 a year, there’ll be some changes coming sooner. You’ll have no government money at all going into your KiwiSaver from July this year.

Which I think is great. Because why should someone earning that amount of money get a government hand-out? They shouldn’t.

Especially, when you consider that the finance minister made no noises yesterday about any longer term changes - such as the ones I always have and always will push for: means testing the state pension and increasing the age you can get it.

But with no talk about either of those, I think the Government should have gone harder and faster with the contribution changes.

I’m not the only one who thinks this.

Rupert Carlyon runs a KiwiSaver provider and he says 4 percent plus 4 percent is better than the 3 percent plus 3 percent that we have now - but nothing like the 6 percent plus 6 percent they have in Australia.

And he says it’s nowhere near the 15 percent average contribution rates in other OECD countries.

He says: “We have a long way to go, but it's better than nowhere."

Another provider, Dean Anderson, says the finance minister should have stood up yesterday and delivered an outline of how New Zealand is going to follow Australia’s lead and increase contributions more than it did yesterday.

And he will get no argument from me.

Because we need to be way closer to the way they do things in Australia with their retirement savings scheme if there’s any hope of keeping state pension entitlement anything close to 65.

Which I think is way too low. The retirement age should be, at least, 67.

We also need to be way closer to the way they do things in Australia if we’re going to hold on to this pipedream of keeping the pension a universal benefit that everyone - whether they need it or not.

Yes, I know the consequences of contributing more to KiwiSaver. It means less money in the pocket in the here and now. Which is why some people are warning us today that the changes aren’t great news for everyone.

Retirement Commissioner Jane Wrightson says low-income earners, Maori, women and self-employed will be hit the hardest by the lower government contributions.

She says: "It's a shame there are so few government incentives for a scheme that underpins private saving for retirement.”

The Retirement Commissioner would have liked to have seen the Government use the money it’s going to save from reduced contributions to help these people out.

But, irrespective of how we are affected by having to pay more into our KiwiSaver and getting less contributions from the government, we need to remind ourselves what saving is all about.

It’s about denying ourselves in the here and now, to benefit in the future. And yes, we will all be affected by these changes announced yesterday to varying degrees.

But, what it comes down to for me, is that these changes are about denying ourselves a little bit more than we do at the moment, so that we can have a little bit more in the future.

And what’s so bad about that?

<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Quite a well-known chief executive and finance guy told me once that, in business, you should always make use of other people’s money first.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Which is exactly what the Government is doing with the KiwiSaver changes announced in yesterday’s budget.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">It wants more of our money going in from our wages and salaries and less of its money going in through government contributions. Although, that’s our money too when it comes down to it.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">But the gist is, the minimum contributions are going to increase from 3 percent to 4 percent and the bit the Government chips in each year is halving - from a maximum of $520 to a maximum of $260.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">The change in what we pay-in to our KiwiSaver is going to be somewhat gradual. From April 1 next year, the rate will shift to 3.5 percent, before increasing again in April 2028 to 4 per cent.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">But if you’re earning more than $180,000 a year, there’ll be some changes coming sooner. You’ll have no government money at all going into your KiwiSaver from July this year.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Which I think is great. Because why should someone earning that amount of money get a government hand-out? They shouldn’t.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Especially, when you consider that the finance minister made no noises yesterday about any longer term changes - such as the ones I always have and always will push for: means testing the state pension and increasing the age you can get it.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">But with no talk about either of those, I think the Government should have gone harder and faster with the contribution changes.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">I’m not the only one who thinks this.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Rupert Carlyon runs a KiwiSaver provider and he says 4 percent plus 4 percent is better than the 3 percent plus 3 percent that we have now - but nothing like the 6 percent plus 6 percent they have in Australia.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">And he says it’s nowhere near the 15 percent average contribution rates in other OECD countries.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">He says: “We have a long way to go, but it's better than nowhere."
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Another provider, Dean Anderson, says the finance minister should have stood up yesterday and delivered an outline of how New Zealand is going to follow Australia’s lead and increase contributions more than it did yesterday.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">And he will get no argument from me.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Because we need to be way closer to the way they do things in Australia with their retirement savings scheme if there’s any hope of keeping state pension entitlement anything close to 65.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Which I think is way too low. The retirement age should be, at least, 67.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">We also need to be way closer to the way they do things in Australia if we’re going to hold on to this pipedream of keeping the pension a universal benefit that everyone - whether they need it or not.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Yes, I know the consequences of contributing more to KiwiSaver. It means less money in the pocket in the here and now. Which is why some people are warning us today that the changes aren’t great news for everyone.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">Retirement Commissioner Jane Wrightson says low-income earners, Maori, women and self-employed will be hit the hardest by the lower government contributions.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">She says: "It's a shame there are so few government incentives for a scheme that underpins private saving for retirement.”
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">The Retirement Commissioner would have liked to have seen the Government use the money it’s going to save from reduced contributions to help these people out.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">But, irrespective of how we are affected by having to pay more into our KiwiSaver and getting less contributions from the government, we need to remind ourselves what saving is all about.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">It’s about denying ourselves in the here and now, to benefit in the future. And yes, we will all be affected by these changes announced yesterday to varying degrees.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;"><span style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 0px; padding: 0px; user-select: text; background-position: 0px 100%; background-repeat: repeat-x; border-bottom: 1px solid transparent;">But, what it comes down to for me, is that these changes are about denying ourselves a little bit more than we do at the moment, so that we can have a little bit more in the future.
<p style="-webkit-user-drag: none; -webkit-tap-highlight-color: transparent; margin: 16px 0px; padding: 0px; user-select: text; overflow-wrap: break-word; white-space: pre-wrap; vertical-align: baseline; font-kerning: none; background-color: transparent; color: windowtext; text-align: left; text-indent: 0px;">And what’s so bad about that?

Every weekday join the new voice of local issues on Canterbury Mornings with John MacDonald, 9am-12pm weekdays.

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Every weekday join the new voice of local issues on Canterbury Mornings with John MacDonald, 9am-12pm weekdays. It’s all about the conversation with John, as he gets right into the things that get our community talking. If it’s news you’re after, backing John is the combined power of the Newstalk ZB and New Zealand Herald news teams. Meaning when it comes to covering breaking news – you will not beat local radio. With two decades experience in communications based in Christchurch, John also has a deep understanding of and connections to the Christchurch and Canterbury commercial sector. Newstalk ZB Canterbury Mornings 9am-12pm with John MacDonald on 100.1FM and iHeartRadio.

Every weekday join the new voice of local issues on Canterbury Mornings with John MacDonald, 9am-12pm weekdays.

It’s all about the conversation with John, as he gets right into the things that get our community talking.

Canterbury Mornings with John MacDonald

John MacDonald: We're not going far enough with superannuation changes

https://api.omny.fm/orgs/7784f840-c291-422a-924b-ad9000bbad71/clips/cddbd5b4-558b-4513-acb2-b2e6001ed067/transcript

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