Many of the people who do not contribute to KiwiSaver on a regular basis are on a low income or are not in paid employment, research suggests.
More than 2.7 million Kiwis are signed up to the retirement scheme but 1.1 million were considered to be non-contributors in the year to March 31, 2017.
That means that while those people are signed up to the scheme they don't contribute to it regularly. Of those 1.1 million, 428,836 were either children, aged 17 and under, or over 66 years of age.
But new research from KiwiSaver provider AMP could give some clues why the other 670,000 working age adults are not putting money into the scheme.
It surveyed 500 non-contributing members and found 80 per cent had a personal income of less than $50,000 and half (48 per cent) had a household income of below $50,000 - well below the national average of $98,000 for households.
It also found non-contributors were more likely to be younger and not in paid employment.
Of those surveyed 46 per cent of non-contributors were between 18 and 35.
According to Statistics New Zealand, only 7 per cent of 18 to 24-year-olds are in full-time employment.
The research found 49 per cent of non-contributors were not in paid employment. Of those not in paid employment 40 per cent were home-makers, most of whom were women.
Blair Vernon, chief executive of AMP Financial Services, said it appeared that KiwiSaver was working for those on middle and high incomes but not for all.
"It feels like it is not addressing a prosperous retirement for everyone which I think we should be aiming for."
Vernon said there needed to be lower and more graduated entry points for people to begin contributing to KiwiSaver.
Currently the minimum contribution rate is 3 per cent but Vernon said there should be options to start contributing at 1 per cent and 2 per cent.
"3 per cent is just too tough."
For those struggling already, Vernon said the idea of taking a 3 per cent pay cut to get another 3 per cent from their employer was not attractive to people who could not see any instant benefit.
His view bucks that of the Retirement Commissioner who, in 2016, recommended the government increase the minimum contribution rate to 4 per cent to help increase the amount people were saving.
The National-led government rejected the idea saying there was little evidence that it would boost savings and warned it could make it harder for low income workers to contribute to KiwiSaver.
Vernon also believed there needed to be more incentives for low-income earners and suggested those earning under $50,000 should get a dollar for dollar member tax credit, which could be paid for by cutting the subsidy to higher earners.
At the moment, people get 50c from the government for every dollar they put in to Kiwisaver up to a maximum of $1043.
"I think there are some things that you could do that don't have to be costly but would further incentivise the right people."
Vernon said the member tax credit also needed to be re-branded so that people who were not in paid employment understood that they could get it regardless of whether they earned money and paid tax.
"One of the easiest ways to get people engaged is to re-label it for what it is."
David Boyle, group manager education at the Commission for Financial Capability, said while it was great to find out more about those who did not contribute to KiwiSaver, more information was needed about the barriers.
"I can't accept non-contributors are doing so purely because of affordability," he said.
Boyle said the thing that struck him the most about the research was that nearly half of non-contributors were not in paid employment.
That meant many of them must have been actively sold KiwiSaver at some point in the last 10 years or had a change of circumstance which meant they were no longer working.
"It suggests there has been an active decision to join but they have forgotten about it along the way."
That correlated with its research undertaken earlier in the year, which showed 39 per cent had forgotten about it.
Boyle said even those who weren't working because they were a 'home-maker' would have some kind of household income and should be making the most of the member tax credit.
He said providers needed to do more to engage with their members, especially those who were not employed through a paye (pay as you earn) job.
"Providers have got to find out ways of getting KiwiSavers connected."
Vernon agreed providers had a role to play and said it was working on that through experimenting with new technology including personalised videos that was having some cut through to members.
It was also reminding people about making contributions throughout the year to ensure they got as much of the member tax credit as they could, rather than a once a year reminder.
What is the member tax credit?
• an annual government subsidy available to all KiwiSaver members aged 18 to 64.
• for every $1 a person saves they get 50c up to a maximum of $521 a year
• If you are not working or are self-employed you can still get the subsidy. Set up a direct credit of $20 a week to your provider or put in a lump sum of $1043 before June 30 to get the full amount.
• Or just contribute whatever you can afford - every dollar you put in counts towards getting the subsidy,
• Your KiwiSaver provider applies for the member tax credit after June 30 and it goes into your account around July/August.