Who's worse off under new KiwiSaver changes?
An increase in contribution rates for KiwiSaver should make most savers better off - but it won't benefit everyone.
As part of the Budget, the Government announced it was increasing the default KiwiSaver contribution rate to 4% from employees and 4% from employers.
Over a saver's lifetime, including a first home withdrawal, it estimated this could make a high earner 28% better off at retirement and a low income or part-time worker 21% better off.
But some people won't be better off at all.
Retirement Commissioner Jane Wrightson said about 20% of KiwiSaver members would be worse off due to the Budget changes.
The changes also included a reduction in the member tax credit to $260.72 (from $521.43 previously) when someone contributed at least $1042, and the removal of the credit entirely for people earning over $180,000.
People who are paid on a "total remuneration" basis will not benefit when contribution rates increase.
"Total remuneration" refers to the practice of employers offering a salary package, from which an employee can choose to make KiwiSaver contributions, rather than setting aside a separate contribution on top of an employee's salary.
Some KiwiSaver providers, such as Kōura founder Rupert Carlyon, have expressed concern that more employers might shift to the total remuneration model, to avoid the higher rates.
Wrightson said it would be important that did not happen. She has been calling for it to be banned for some time.
Earlier Retirement Commission research showed just under half of employers used total remuneration for some employees.
"It goes completely against the sprit of KiwiSaver whereby retirement savings are meant to be contributed by the employer, the employee and the Government contribution," Wrightson said.
"That's the model. People will get no benefit from the changes on a total remuneration contract. This system needs to be changed so that total remuneration is abolished.
"It's the old story - money in your hand versus money salted away. It becomes very tempting, so total remuneration was not permitted in the original KiwiSaver settings, it was changed a few years ago and I think it should change back."
Wrightson said lower-income workers were more affected by the drop in the member tax credit because it was responsible for a greater portion of their retirement savings.
She said, for people earning less than $30,000 a year, the member tax credit was expected to add up to 15% or 20% of their total balance at 65.
With the reduction, it would be 6% to 11%.
Wrightson said there was a divide forming between people who could afford to make KiwiSaver contributions at all and those who could not.
Self-employed people do not have access to an employer contribution in many cases and many providers say it is common for them to opt to contribute only the $1042 required to get the member tax credit.
In 2024, about 200,000 only received the government contribution, including 125,000 self-employed people, Wrightson said.
She said the commission would conduct some more investigation into the impact of the changes on self-employed people and gig workers.
"We're doing some work with Hnry to look at some of their data… We need to find out who's doing what, who's not doing what, where the gaps are and what the response by Government could be."
rnz.co.nz
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
3 hours ago
- Scoop
30 With Guyon Espiner: Netflix ‘Doesn't Need Us' Or Our ‘Silly' Levy
Global streaming giant Netflix 'doesn't need us' and a proposal to force them in to funding local shows is 'silly,' says TV production pioneer Dame Julie Christie. Dame Julie, a founding force in reality TV and an internationally successful format producer, is the latest guest on RNZ's multimedia talk show 30 with Guyon Espiner. She is critical of proposals suggested by industry groups and the government that would compel global streamers to invest more in local productions or face bans. More focus needs go on funding ideas and formats that will garner international success, she says. People should not 'stand around and whine, or do silly things like threatening Netflix – 'If you don't make more local productions, we'll turn you off in this country.' You can imagine the public reaction to that.' Christie, whose production company Touchdown helped define and export iconic shows like Treasure Island and Game of Two Halves, said New Zealand needs to be more realistic about its size and global influence. 'Netflix doesn't need us,' she says, dismissing suggestions that a levy on streaming giants would fix the problem. 'And who's going to decide what's made with that revenue? Netflix. I just don't think it will work.' Instead, the country should focus on producing globally appealing content in genres where New Zealand can compete – particularly in unscripted formats and documentaries. 'True crime is the biggest genre in the world … and we're not making it, because you usually can't get it publicly funded,' she says. 'As a result, we're not making what the world wants.' NZ On Air has become too narrowly focused on funding projects that meet too specific cultural criteria, often at the expense of international interest. 'The number one thing you have to have to get funded by New Zealand on Air is to reflect our cultural identity. Now, what is our cultural identity now?' Highlighting her experience producing a docu-series about Auckland's Football Club, Forever FC, Christie says: 'If you go to Auckland FC, it's very different [to NZ On Air criteria]. It's 20 immigrant families within one team. I think that we have to really open up about what we think our culture is.' New Zealand's small population, while a challenge, could be turned into a strength if the industry embraced creating distinctively local stories and tailoring them for international sale. 'We're belly-gazing, basically,' she says. 'We don't think, 'If I adjust this show by 20%, I might be able to sell it to Australia or a smaller American channel.'' NZ On Air needs to adapt to the new global content environment and stop treating cultural identity and commercial potential as mutually exclusive. 'There should be a massive tick if you've got international viability in anything,' she says. Scrambling for cash Christie welcomes the increase in screen production rebates announced in the Budget, but says we should be aiming higher. 'It's working in bringing film production into New Zealand. That provides jobs. The problem is, it's working for wages,' she says. 'It is less than half the cost to make shows here than most places in the world. 'We should be taking huge advantage of that, while creating our own IP … creating things we own.' New Zealand used to have a stronger international outlook, but the industry has become bogged down in local funding battles, Christie says. 'We were leading the world in creating formats in the early 2000s. Now we just don't do it because we're all scrambling to get that little bit of New Zealand On Air money.' * Watch the full interview with Dame Julie Christie on 30 With Guyon Espiner.
Scoop
4 hours ago
- Scoop
Concerns KiwiSaver Is Being Used As ‘Piggy Bank' To Solve Financial Woes
Article – RNZ A growing number of New Zealanders are making hardship withdrawals from their retirement savings. , Money Correspondent KiwiSaver is in danger of being considered a 'piggy bank' to solve all of New Zealanders' financial woes, one provider says, and too many people are tapping into their savings on hardship grounds. Founder of Kōura KiwiSaver scheme Rupert Carlyon was wary of calls for settings to be changed to allow people to use their money to buy farms. He said KiwiSaver was already being called on to solve the country's housing and infrastructure crises. Carlyon said changing the rules to allow more withdrawals sent the wrong message to people, who should be using KiwiSaver for their retirement. Instead, they were tapping into KiwiSaver in growing numbers. In April, 4220 people withdrew savings for financial hardship reasons, up from 3700 in April 2024. They withdrew a combined $37.6 million. 'It encourages more and more people to think about it like a piggybank. It's scary what's happening in that space,' he said. He said he saw people making repeated hardship withdrawals, depleting their balance. 'People come back multiple times with the same claims… it's hard to figure out what's real and what's not.' He said it would now not be possible to close the 'hardship loophole' because people expected it to be available and any change could dent confidence in the scheme. But he said it should be tightened up so there was a limit on the number of withdrawals that could be made within a certain timeframe. 'The other part is it's very resource intensive. We spend on average up to six hours per financial hardship claim… It's hard on staff because they often have to say no when they want to say yes.' A spokesperson for Public Trust, one of the KiwiSaver supervisors, said people were not required to repay hardship withdrawals if it was found they were not necessary. 'Their future self might not thank them for dipping into their retirement savings. We see situations of real and urgent need… there are strict rules and checks in place to help ensure withdrawals are only approved for genuine financial hardship, and applicants need to sign a legal declaration confirming their situation. 'If someone doesn't use funds as intended, it could affect their ability to make another hardship withdrawal in the future.'
Scoop
5 hours ago
- Scoop
Solar On Farms: Unlocking Farm Cost Savings
Press Release – New Zealand Government Solar on Farms is a practical support package that helps farmers determine if solar and battery systems are right for them by working with them to navigate the details of installing and leveraging this technology for their businesses. Minister for Energy Energy Minister Simon Watts has announced the Government's new Solar on Farms initiative, which will support farmers in taking the next step towards installing solar and battery systems, helping them reduce energy costs, increase on-farm resilience, and allow farmers to gain greater control over their power use, leading to increased efficiency and productivity. The Solar on Farms package includes: Independent and practical tools and advice to assist farmers A dedicated help function to guide farmers through the opportunities Feasibility studies and technology demonstrations tailored to various farm types Real-life energy data for different farm types, showing how solar energy works in practice Independent advice on progressing consents and applications with local and regional bodies and Electricity Distribution Businesses A partnership with the Centre for Sustainable Finance to accelerate access to finance, making it quicker, simpler and easier. 'Kiwi farmers have a long history of adapting, problem-solving and finding ways to be smart with land and resources. Real progress comes from the ground up, from people who understand the land, the seasons, and how to run a business,' Mr Watts says. 'That's why we want to give farmers more choices and the ability to unlock the cost savings that come with on-farm solar, batteries, and flexible energy systems. However, to achieve this, farmers require the correct information, evidence, tools, and trusted advice. 'That's where Solar on Farms comes in. It's a practical support package that helps farmers determine if solar and battery systems are right for them by working with them to navigate the details of installing and leveraging this technology for their businesses. The package provides farmers with direct access to independent advice. It offers solutions tailored to various farm types and energy profiles. 'Farms across New Zealand, especially those using irrigation and other energy-intensive systems, are facing increasingly high and unpredictable energy costs. This adds real pressure to already tight margins. 'On-farm solar and batteries can help reduce that pressure by improving self-sufficiency and lowering exposure to rising energy prices, especially in rural and remote areas. Generating electricity on-farm also creates opportunities to receive revenue from solar electricity back to the grid. 'Early modelling tells us that if 30 per cent of Kiwi farms installed larger systems – of the size we see on some farms already – they could generate as much as 10 per cent of New Zealand's current electricity demand. This is a real win for the security of our energy supply.' EECA is leading the delivery of Solar on Farms in collaboration with farmers, sector bodies, and technical experts, and the package of initiatives will be available soon. Fieldays 2025 also celebrated the launch of Farmlands Flex, a complementary solar on farms product from Farmlands and energy innovator Blackcurrent, with the support of Ara Ake, New Zealand's energy innovation centre. The product combines solar, batteries and smart software in a fully managed system that enables users to generate, store and manage their energy on-site. 'The Farmlands Flex product includes equipment, flexible demand management software, and takes care of the installation and application processes on behalf of the farmer,' says Mr Watts. 'It is an excellent demonstration of how solar purchasing and installation can be made more efficient.' Mr Watts also welcomed ASB's recent announcement of a new 0 percent solar loan aimed at helping farmers secure long-term energy resilience and cost savings. 'I look forward to seeing how products like Farmlands Flex, the ASB SMART solar loan, and our Solar on Farms initiative help set the farming sector up for long-term success.'
