It’s only fair for employers to make KiwiSaver contributions for over-65s – Sarah Hearn

Sarah Hearn is Westpac’s general manager of product, sustainability and marketing.

Opinion

THE FACTS

• Nearly a quarter of people aged 65 and over are still in the workforce.
• Employers aren’t required to contribute to KiwiSaver for workers aged 65 and over.
• By 2078 up to 15% of New Zealand’s workforce will be aged 65+.

Our definition of what it means to be “old” has changed dramatically over the past few decades.

We’re typically enjoying better health for longer and many people are delaying the traditional retirement phase of life – nearly a quarter of New Zealanders aged 65 and over are still in the workforce.

However, while some people are still working because they’re passionate about what they do, there are others who simply can’t afford to retire.

And the way the law currently stands, employers don’t have to contribute to the KiwiSaver funds of workers aged 65 and over.

Yes, superannuation payments from the Government kick in at the age of 65, so older New Zealanders are receiving financial support for their later years.

But if you’re still working, surely it’s only fair that you receive the same benefits as your younger colleagues?

With average life expectancy now in the 80s, it’s likely that our retirement savings will need to see us through several decades.

And current KiwiSaver balance averages indicate those could be tough decades for some.

My son’s one of the children born in the past five years who can expect to live into his 80s or beyond.

But will his later years be spent relaxing and enjoying time with friends and family, or is he more likely to be head down, stressed about funding his lifestyle and healthcare needs?

According to Stats NZ’s labour force projections, by 2078 up to 15% of New Zealand’s workforce will be aged 65+.

Making it compulsory for employers to continue to contribute to their workers’ KiwiSaver funds seems a no-brainer, helping these people to boost their balances in those critical last years of saving.

At Westpac NZ, we welcomed the recent changes to KiwiSaver to increase the default contribution rate to 4% for both employees and employers from 2028.

But we think there’s an opportunity to do more to support people with their savings – continuing employer contributions is an obvious next step.

We understand that this would be an extra cost for businesses, but it would be a relatively small addition to overall wage costs, and the change could be softened through measures like phasing.

I was born in Australia and first entered the workforce there at the age of 16.

My first job was scanning groceries in a supermarket, at a time when compulsory superannuation contributions were set at 7%.

Over the ensuing decades, I’ve seen firsthand the success of the Australian Government’s long-term approach to gradually increasing contributions – largely because both the Government and businesses were given multi-year timeframes to adjust. And in Australia, employer contributions have no age limit.

KiwiSaver turned 18 last month, meaning it’s officially now an adult. Is it time for us as a nation to reflect that adult status and ensure we have the right framework in place to best support people with their retirement savings?

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