KEY POINTS:
New Zealand's KiwiSaver scheme is being closely watched by Britain and Ireland, says an Irish academic.
Gerry Hughes, a professor at Dublin's Trinity College, has travelled to New Zealand to attend a Retirement Symposium today to discuss retirement savings policy.
Hughes said KiwiSaver, which was launched in
July last year, was of huge interest to countries like Ireland and Britain which were in the process of changing their own pension systems.
"The KiwiSaver development is being looked at with considerable interest in Ireland and the UK. People are interested to see how it will work out."
Hughes said Ireland and New Zealand shared many similarities, including a population size of around four million.
But he believes a key divergence point for the two countries occurred when New Zealand decided to drop all tax incentives for private savings in 1987 to focus on funding national superannuation.
Until last year, when KiwiSaver was introduced, New Zealand was one of the few countries in the Western World without Government-funded incentives to save.
Hughes said Ireland took the opposite course and increased tax incentives for private savings - a move which, he says, has been hugely costly and has mainly benefited higher income earners.
"There is a private scheme which is voluntary but take-up has not been high and it has done very little for the people at the bottom."
While Ireland has a state-funded pension, Hughes said until recently it had been at a very low level relative to average earnings.
"The state pension system was inherited from the UK and it pays only a very low level of income; a consequence of that is Ireland has one of the highest levels of pensioner poverty rates."
Since then Ireland's poverty level for those over 65 has averaged at 29 per cent while New Zealand's has averaged at just 7 per cent.
He believes the Irish Government should look more closely at New Zealand's universal national superannuation system to help reduce Ireland's post-retirement poverty problems.
Hughes said a key difference was New Zealand's focus on providing for all citizens rather than Ireland's focus on the workforce.
He said voluntary workplace schemes meant that some people in the workforce would always miss out because of the seasonal nature of their work. While some employers wanted to provide incentives for staff to stay in their jobs, there was no need to do so for seasonal workers, which meant those in the hospitality and tourism industries often missed out.
"I like the New Zealand system because the Government gives a commitment of providing a reasonable level of income. If people want to make additional savings, it is up to them."
Hughes said the cost of providing for people in retirement was becoming a worry for Western countries as the ageing population grew.
THE BRIEF
What: Retirement Symposium
Where: Auckland University
Key topics: The last 20 years of retirement savings in NZ - how did we get a combination of voluntary saving and NZ Superannuation?
What were the lessons and who were the key players?
How have other similar countries developed their systems?
Looking forward - where are we now?
SUSTAINABILITY THE THEME OF EXPO
The three-day Small Business Expo gets under way at Auckland's ASB Showgrounds today.
The event, also to be held in Christchurch and Wellington, attracted 13,500 visitors last year.
Products and services, from office stationery to business mentoring to telecommunications will be displayed by 230 exhibitors.
Organisers say SME owners will also be able to access free advice on a range of issues, including taxation and human resources.
The theme of the expo is sustainability. Experts will deliver seminars tomorrow on topics such as `the business case for carbon neutrality', and 'how to build a compliant carbon footprint inventory'.
Retirement savings up but scheme still confusing
Nearly two-thirds of New Zealanders are now saving for their retirement, says AMP's Superwatch survey.
In February last year only 48 per cent of people were saving for their retirement but the number has rocketed up to 65 per cent over the last year as a result of KiwiSaver.
Of those surveyed 28 per cent said they had already joined KiwiSaver, 20 per cent said they were likely to join by April 1 and 17 per cent said they would consider joining later.
AMP Capital's head of investment strategy Leo Krippner said overall the survey was good news.
"More New Zealanders are now considering making provision for a comfortable retirement.
"Even better, more people are doing something about it."
However, 38 per cent also said they were unlikely or very unlikely to join KiwiSaver.
Of those who don't intend to join 28 per cent said they were saving through other means and a further 15 per cent would prefer to make their own arrangements.
Needing more information ranked third on the list of reasons for not joining KiwiSaver at 11 per cent.
Ranking fourth, 8 per cent of people said they could not afford to join the scheme.
Overall, nearly half those surveyed felt they did not know enough about KiwiSaver or felt confused about it.
Krippner said the confusion signalled more education was needed.
