ANZ Funds Management managing director Fiona Mackenzie said KiwiSaver could hard code any income inequality. People who earned less over their lifetimes would end up with less in their KiwiSaver accounts as a result.
Northland had an average household income last year of $123,900 according to government data, while in Gisborne it was $133,200.
Wellington’s average was $162,400.
“Our hypothesis is that income variation is the biggest driver,” she said.
“I genuinely have a concern that KiwiSaver is amplifying existing inequality ... whether it’s gender pay gaps or ethnic pay gaps ... all of that gets amplified because KiwiSaver is anchored effectively to PAYE incomes.
“I think it really is time we started having that larger conversation.”
She said, now the scheme had been around for 18 years, it was appropriate to ask whether it was on track.
“The answer is not really. It’s a great system, it’s had awesome uptake ... but if you step right back, are people on track to be able to self-fund a comfortable retirement? No is the answer.”
She said, if left unaddressed, the disparities could compound over time and lead to uneven retirement outcomes across the country.
South Islanders led the way when it came to making contributions.
In Marlborough, Otago, Southland Canterbury, 70% of members were actively saving, compared to 60% in Auckland and Northland.
Mackenzie said Southland and Canterbury had very high proportions of members receiving full or partial government contributions. The full contribution is available to people who contribute at least $1042 a year.
The proportion in Gisborne and Northland was very low, she said.
“Research typically shows those two areas have the highest level of deprivation so again I think we think there is a lot of linkage between income levels and it’s part of the reason why as a KiwiSaver provider we spend a lot of time and energy trying to help people around that government contribution point because that is one of the remaining incentives.”
She said the government contribution could make a material difference to people with lower balances.
Mackenzie said the regional disparity could also highlight differences in economic conditions, as well as financial awareness.
“It reflects New Zealand’s two-speed economy, where some regions are doing better and activity contributing to KiwiSaver, while others lag behind.
“Understanding these variations is crucial, it allows policy-makers and providers to tailor strategies that boost participation in lower contributing areas, helping ensure all New Zealanders have the opportunity to build long-term financial security.”
Nationwide, 40% were not regularly contributing.
About 27% of people aged 16 and 17 were, even though the data was collected before there were matching employer or government contributions available for them.
Mackenzie said contribution rates had not been materially affected by the economic downturn.
“I think that’s incredibly positive ... the percentage of our customers who are contributing has stayed fairly stable and I think that’s a really good thing.”
- RNZ
