KiwiSaver vs Universal Superannuation

I’m a fan of Kiwisaver, partly because from the day Cullen make it de facto compulsory through mandatory employer contributions I realised one day this will become the major source of income for people in retirement.

I’ve always thought at some future date, when say 75% of employees are in KiwiSaver, such as 2025 a Government will probably transfer the Cullen Fund into KiwiSaver and make it compulsory for all.  Logically NZ Superannuation will start to be means tested and only there for those who don’t have sufficient funds in KiwiSaver.

Now the Retirement Commission has looked at this, and come to a similiar conclusion:

“The incentives are now a significant cost that future governments will have to consider.

“The danger is that these costs become too high, and something has to change.”

The commission said that in a worst-case scenario, New Zealand’s universal superannuation would have to be cut to fund KiwiSaver.

It is the near ultimate irony is that Dr Cullen’s crowning achievement with be the effective privatisation of NZ Superannuation.  Now in the next few years or even the next decade, but at some stage in the future KiwiSaver will become the major source of income for retirees, and NZ Superannuation will become just a top up for some.