Zealand: More work-based retirement saving schemes needed, says taskforce
A special advisory group to promote participation is one
of many recommendations made by this year's Periodic Report Group,
established as part of the Todd Taskforce's look at retirement savings in
the early 1990s.
The group convenes every six years to analyse aspects of
the country's superannuation and retirement savings policy and present a
report to Government.
Anyone expecting this year's report to advocate major
changes will be disappointed.
But its chairman, Vance Arkinstall of the Investment
Savings and Insurance Association, said the group had purposefully taken a
more practical approach because past reports had had only minimal effect.
"If you look at past PRG reports they've actually
gone nowhere. We've put in a series of quite specific recommendations.
"Not all of them will make the final cut, but those
that do could well form a positive work programme for Government to put
into place over the next two or three years."
The group finds that New Zealand has a small window of
opportunity to do something about private retirement savings before the
baby boomer generation starts collecting superannuation.
It recommends that work-based savings schemes be
promoted, that education programmes be bolstered and targeted at women,
Maori and Pacific Islanders, and that tax incentives be avoided.
Less than 15 per cent of the labour force belong to
registered work-based schemes. To raise that figure, the report suggests
that a special advisory group be set up to agree on an approach to reduce
the barriers to participation for employers and employees.
Arkinstall said the group could be constructed out of
one that already meets, which includes the Council of Trade Unions, ISI,
Business New Zealand, the Retirement Commissioner and the Association of
Superannuation Funds of New Zealand.
That group had already done a lot of work but it had no
mandate or recognition from Government.
Work-based saving need to move away from traditional
employer-sponsored schemes towards more portable, individual plans, the
It suggests that the new advisory group could present a
report to the Government by the end of next year.
The group does not recommend tax incentives, but says
that if the Government wants to go down that road then the changes should
favour low and middle-income earners.
It also recommends that the Government progress towards
a strengthened self-regulatory model for financial advisers.
They are currently largely unregulated.
Retirement Commissioner Diana Crossan yesterday welcomed
the idea of financial advisers coming up with an approach to regulation
and passing it to the Government by the end of next year.
"It is high time that the industry takes this
recommendation to heart," she said.
"The need for some action in this area has been
talked about for 20 years, and it's now time to do something about it.
"It is essential that New Zealanders have access to
high-quality financial advice and that they can trust the advisers they
The Financial Planners and Insurance Advisers
Association said it agreed with the group's comments.
"The challenge will be to get all the advisers in
New Zealand to sit down and come up with an agreed self-regulation plan to
present to the Government by the end of next year," FPIA chief
executive Phillip Matthews said.
Business NZ chief executive Simon Carlaw said the report
was correct to focus on educating people about saving and removing
"We also agree that there is potential for more
opportunities for people to save for retirement through deductions from
wages at source, into flexible, portable superannuation schemes."
But he was disappointed at the report's failure to
tackle the effect of the NZ Superannuation Fund in making people think
there was no need to save for retirement.
"The existence of that scheme, that can never fund
more than a fraction of the future costs, is making people too
Ultimately, Carlaw said, the best way to boost saving was to boost economic growth.