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How Much New Saving will KiwiSaver Produce?


Author Info

  • John Gibson

    (University of Waikato)

  • Trinh Le

    (New Zealand Institute of Economic Research)


After two decades of tax neutrality for private saving, New Zealand policy changed radically with the recent introduction of tax incentives for KiwiSaver. A key issue for tax-favoured saving schemes is the extent to which existing saving is reshuffled versus new saving created by reduced consumption. Using data from a nationwide survey carried out by the authors, we estimate that each dollar of KiwiSaver balances represents only $0.09-$0.19 of new saving. The rest is either reshuffling amongst existing saving and debt by KiwiSaver members, or else taxpayer and employer transfers which reduce national saving elsewhere. Homeowners are least likely to fund their KiwiSaver contributions by reducing spending, indicating possible mis-targeting since owners are often blamed for excessive consumption arising from house price wealth effects. There is little evidence that KiwiSaver affects either the reported trend in saving or the presence of dis-saving. Since only one-tenth of households report negative saving, KiwiSaver may be a costly and ineffective solution to a relatively small problem of insufficient household saving.

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Bibliographic Info

Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 08/03.

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Length: 19 pages
Date of creation: 12 Mar 2008
Date of revision:
Handle: RePEc:wai:econwp:08/03

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Related research

Keywords: KiwiSaver; retirement saving; substitution effects; tax incentives;

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Blog mentions

As found by, the blog aggregator for Economics research:
  1. More questioning of the efficacy of Kiwisaver
    by Matt Nolan in The Invisible Hand in Economics on 2014-02-11 22:00:40
  2. More questioning of the efficacy of Kiwisaver
    by Matt Nolan in TVHE on 2014-02-11 22:00:40


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