KiwiSaver: An Initial Evaluation of the Impact on Retirement Saving
AbstractKiwiSaver is a voluntary savings scheme aimed at increasing the retirement wealth of a target population. A critical element shaping the success of KiwiSaver is the extent to which individuals participate in the scheme, given its voluntary nature; and, having chosen to participate, the extent to which their attitudes and practices toward savings have been modified by their participation. This paper presents the results of an initial evaluation to assess individuals' saving behaviour following the introduction of the KiwiSaver scheme. It is based on the findings of a national survey conducted in 2010. We find that members adjust their savings portfolio such that only about one third of the contributions they make to their KiwiSaver account represents additional savings. Further, only 22% of respondents report that their expected retirement income would not be sufficient to meet basic living costs. Critically, regression analysis finds no relationship between KiwiSaver membership and any shortfall or excess in respondents' expected retirement income relative to either the amount needed to meet basic needs in retirement or to be comfortable. Consequently, examination of standard measures of programme efficacy such as target effectiveness and leakage suggests that KiwiSaver has been only modestly successful in reaching the target population and that leakage to the non-target population was high. This implies that the ongoing cost of the scheme per target member could exceed $13,000 per year. Finally, recognising that KiwiSaver may have had broader objectives not explicitly stated in the Act, the scheme's possible effect on national saving was examined. In the long run the effect on net national saving appears marginal at best.
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Bibliographic InfoPaper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 11/04.
Date of creation: Dec 2011
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KiwiSaver; New Zealand; Saving; Retirement; Additionality;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- D10 - Microeconomics - - Household Behavior - - - General
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Leslie Hull, 2003. "Financial deregulation and household indebtedness," Reserve Bank of New Zealand Discussion Paper Series DP2003/01, Reserve Bank of New Zealand.
- Ellis Connolly, 2007. "The Effect of the Australian Superannuation Guarantee on Household Saving Behaviour," RBA Research Discussion Papers, Reserve Bank of Australia rdp2007-08, Reserve Bank of Australia.
- Anton Samoilenko & David Law, 2014. "KiwiSaver: Comparing Survey and Administrative Data," Treasury Working Paper Series, New Zealand Treasury 14/06, New Zealand Treasury.
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