Latest news with #RetirementCommission
Scoop
15-06-2025
- Business
- Scoop
New Sorted Retirement Navigator A One-Of-A-Kind Tool For Spending In Golden Years
A groundbreaking new Sorted tool has been released to help New Zealanders nearing or already in retirement feel more confident about their financial future and how to plan for it. Launched by Te Ara Ahunga Ora Retirement Commission, the retirement navigator is free to use on Working out how to turn a saved lump sum into a steady income to live on in retirement is a financially and mathematically challenging task. Partnering with the Retirement Income Interest Group (RIIG) of the New Zealand Society of Actuaries (NZSA), the Retirement Commission has created a customisable tool that takes care of the calculations. Based on extensive modelling and drawdown 'rules of thumb' created by the RIIG, the retirement navigator addresses a common dilemma – how not to spend too much and run out of money or spend too little and unnecessarily compromise quality of life. Taking into account people's invested savings (for example, KiwiSaver) and NZ Super, the tool helps users determine the optimal income they can draw down over their retirement. By adjusting variables such as when they expect their retirement to start and their desired lifestyle, people can see how long their savings might last in different scenarios. Sorted's new retirement navigator is the first digital tool of its kind to be built by the Retirement Commission, and the first entirely new Sorted tool in several years. There are currently no other publicly available tools like it. 'There's a lot at stake for retirees when they start living off their invested savings,' says the Retirement Commission's Personal Finance Lead Tom Hartmann. 'They don't get any practise at it, or the option to go back in time and grow that money all over again. There are uncertainties about how long they'll live, how high prices will rise with inflation, how investment markets will do, and how much all of this will shape their lifestyle. 'It's been such a privilege to work alongside the RIIG actuaries and bring their modelling to life to enable people to forward plan. The retirement navigator puts it to real use for pre-retirees and retirees, so they can plan their spending wisely.' Recognising that retirement takes different shapes and forms, the new tool offers four rules of thumb to match personal preferences and lifestyles: * The Inflated 4% Rule: For those who are concerned about longevity and want to leave an inheritance. * The 6% Rule: For those wanting to spend more in their early retirement years. * The Life Expectancy Rule: For maximising income throughout retirement. * The Fixed Date Rule: For those planning to rely on NZ Super after a certain period. Each option comes with clear guidance and practical solutions to real-life financial challenges. The NZSA's Ian Perera, Convenor of the RIIG says, 'We're thrilled to see our work on rules of thumb for drawdown come to life thanks to Te Ara Ahunga Ora Retirement Commission. 'We always hoped people thinking about their retirement would find our work helpful, and the Sorted retirement navigator tool takes it to the next level of access and understanding. Moving from accumulating savings to drawing them down is not straightforward. We admire how Sorted's experts have embraced our actuarial work while making the retirement journey as easy to navigate as possible.' Sorted's retirement navigator tool aims to help New Zealanders: * Effectively integrate their NZ Super with other retirement savings * Make more informed decisions about their savings * Better understand their options for creating sustainable retirement income * Adapt their spending strategies as circumstances change * Approach and enjoy retirement feeling less stressed and more secure. Potential applications include use by KiwiSaver providers and financial advisers throughout Aotearoa when offering tailored guidance to clients and customers. Although intended for those who are nearing or already in retirement, the retirement navigator can be useful to people of any age who wish to examine how they might best manage their projected savings. Those who are more than a decade away from stopping paid work can forecast how much they're on track to have by using Sorted's existing retirement calculator and KiwiSaver calculator. To try the new retirement navigator, visit About Sorted and the retirement navigator Driven by Te Ara Ahunga Ora Retirement Commission to improve New Zealanders' financial wellbeing through accessible, actionable, relatable financial education, Sorted offers a range of free digital tools and calculators. Click here to view them: To read the new guide to using the retirement navigator, click here: About the New Zealand Society of Actuaries The New Zealand Society of Actuaries (NZSA) is the professional body for actuaries practising in New Zealand. It supports a highly specialised pool of around 400 members, of which around 250 are fully qualified actuaries. It sets, maintains and upholds actuarial professional standards and conduct, and supports members as they advance their skills and knowledge. NZSA also contributes to the development of actuarial thinking and its application through thought leadership activities, and provides a source of reference on actuarial matters for government and other interested bodies. NZSA's Retirement Income Interest Group (RIIG) provides a forum for Society members' concerns and ideas relating to retirement income, longevity and related issues. The RIIG has published significant work on retirement income including its drawdown 'rules of thumb'. See the RIIG's work here:
NZ Herald
26-05-2025
- Business
- NZ Herald
KiwiSaver: Cut-off for Government contribution nears – why funds could last 30% longer
The annual cut-off to receive the Government contribution is June 30. Despite the decrease in Government contributions, the Retirement Commission says most KiwiSaver funds should last 30% longer under new changes announced in Budget 2025. Those changes include minimum employee and employer KiwiSaver contributions moving from 3% to 3.5% from April 1 next year and then to 4% from April 1, 2028. This would offset decreases in the Government contribution. Analysis from the Retirement Commission found the contribution change should increase retirement savings for around 80% of contributing KiwiSaver members. For a 35-year-old on an average salary of $80,000, the change in contribution from 3% to 4% could result in a 25% higher KiwiSaver retirement balance at age 65. A 16-year-old earning $30,000, who is not currently contributing but intended to begin contributions at 18 pre-change, is modelled to have about 26% more in additional savings between 2025 and age 65, compared to 22% for a currently contributing 16-year-old. 'Our findings show that the increase of the default employee and employer contribution settings could result in retirement funds lasting on average approximately 30% longer than under the pre-Budget 2025 settings for median salary and wage earners who contribute without interruption over a 40-year working life,' said Retirement Commissioner Jane Wrightson. But for the about 200,000 members receiving only a Government contribution – including self-employed workers – the changes will result in a decrease in their KiwiSaver retirement savings balance, the analysis found. 'It's clear further work needs to be done to consider how we can better support the other 20% who are missing out on savings, which includes low-income earners, the self-employed and many women, Māori and Pacific peoples,' Wrightson said. The Retirement Commission said $1 billion was spent on the KiwiSaver government contribution last year. About two-thirds (2.2 million) of KiwiSaver members received a government contribution, with 77% of those receiving the full amount of $521.43. Finance Minister Nicola Willis told Ryan Bridge on Herald Now that the changes to KiwiSaver would provide people with 'a lot of financial security' and 'a much bigger nest egg'. Asked whether Kiwis would be worse off overall – by paying more now for our retirement later – Willis responded: 'I just don't accept that at all'. 'We are also doing other pro-growth, pro-wages policies including Investment Boost and other growth initiatives, so that overall we're confident that wages will keep growing,' Willis said.
RNZ News
22-05-2025
- Business
- RNZ News
Budget 2025: Retirement saving for 80 percent of NZers to increase under KiwiSaver changes, analysis finds
Photo: RNZ / Samuel Rillstone KiwiSaver changes revealed in Thursday's Budget are expected to increase retirement savings for about 80 percent of the scheme's contributing members, an analysis by the Retirement Commission has found. That's despite the reduction in government contributions to member's balances. From 1 July, the government contribution towards an individual's KiwiSaver is decreasing to 25 percent (i.e. 25 cents for every $1 contributed, to a maximum of $260.72). Anyone earning over $180,000 will not be eligible for any government contribution at all. Meanwhile, employee and employer contributions to KiwiSaver would move to a default of 3.5 percent from 1 April 2026 and then to 4 percent from 1 April 2028. Retirement Commissioner Jane Wrightson said the analysis revealed New Zealanders' KiwiSaver funds could last 30 percent longer than under pre-Budget 2025 settings - at least for median salary and wage earners who contributed without interruption over a 40-year working life. "This is great news for most KiwiSaver members but it's clear further work needs to be done to consider how we can better support the other 20 percent who are missing out on savings, which includes low-income earners, the self-employed, and many women, Māori and Pacific Peoples," she said. "While we're pleased to see the government take on board the key recommendations we made in 2024 around increasing the default contribution rate of 4 percent, I would at least have liked to see some of the savings from reducing government contributions be applied to serving these groups where we see the widest retirement savings gaps." Approximately 1.8 million salaried and wage-earning KiwiSaver members (90 percent) are expected to have higher eventual retirement savings balances, including those with incomes above $180,000. Generally, both low- and high-income earners would benefit from the change, but low-income earners would be more impacted by the decrease in government contribution as this made up a greater portion of their eventual retirement savings. About 200,000 members, or 10 percent, are not expected to benefit from the change. This includes people who already have employer and employee contributions at 4 percent and who are on low incomes or are close to age 65. Self-employed and unemployed people - who do not receive an employer contribution - would see a decrease in their KiwiSaver retirement savings balance compared to what they may have expected previously. The Sorted KiwiSaver Calculator has been updated so people can use it to see how the changes will impact them, the commission said. The Budget revealed employee and employer contributions to KiwiSaver would move to a default of 3.5 percent from 1 April 2026 and then to 4 percent from 1 April 2028. Photo: RNZ / Samuel Rillstone The analysis also revealed Thursday's changes could halve the $1 billion spent by the government on KiwiSaver contributions in 2024. About two-thirds of KiwiSaver members (2.2 million people) received the government contribution, with about 77 percent receiving the full amount of $521.43. While the changes might lower the governments bill, it would increase KiwiSaver spend for employers. Most currently contributed the minimum rate of 3 percent to KiwiSaver, Wrightson said, and a qualitative study with 25 business found a range of views on raising the minimum rate. "Not surprising, some, especially those in industries with tight margins such as hospitality, raised concerns about increased labour costs, reduced profitability, and flow-on effects to other areas of the business and employee remuneration. However, others, typically larger organisations or those with progressive HR policies, saw value in supporting employees' long-term financial wellbeing and were more open to higher contributions," she said. "We know these KiwiSaver changes will mean a higher cost for employers, but the gradual increases planned through the setting changes will give businesses the time they need to get ready. "It's important that this doesn't result in more businesses including KiwiSaver as part of total remuneration, as this is something we've been calling to be banned for some time." The commission will continue to explore the impacts of the KiwiSaver changes as part of its 2025 Review of Retirement Income Policies, with a focus on how the government could most effectively reduce gaps in retirement income outcomes. The final report is expected to be completed by December. Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Scoop
22-05-2025
- Business
- Scoop
Budget 2025 KiwiSaver Changes Set To Leave More New Zealanders Better Off In Retirement
The Retirement Commissioner welcomes news the Government is making changes to KiwiSaver which early estimates suggest will leave more New Zealanders with more money saved for their retirement. Announced in the Budget 2025, employee and employer contributions to KiwiSaver will move to 3.5% from 1 April 2026 and then to 4% from 1 April 2028. Alongside these changes, the government contribution is decreasing to 25% (i.e 25 cents for every $1 contributed to a maximum of $260.72) and removed entirely for those earning over $180,000, effective from 1 July. The Sorted KiwiSaver Calculator is currently the only tool in the country which reflects the Budget 2025 announcements, giving New Zealanders the chance to see how the changes will impact them and what their retirement savings would have looked like without them. There are approximately 3.4 million KiwiSaver members, and 2.2 million received an employer and a government contribution or only a government contribution in 2024. Retirement Commissioner Jane Wrightson says, 'we're pleased to see the Government take on board some of the key recommendations we made in 2024, including introducing a higher default contribution rate of 4% for employees and matched by their employers, and extending employer contributions to those aged 16 and 17. We'd also recommended employer contributions for those over 65 but unfortunately the latter has been excluded from these latest changes. 'While increasing contribution rates is generally beneficial for salary and wage earners who qualify for an employer contribution, not everyone benefits from these changes. The reduction in the government contribution will hit low-income earners, Māori, women, and the self employed the hardest.' In March, the Retirement Commission released its annual analysis of KiwiSaver balances data which revealed the gender retirement savings gap shows men having on average 25% higher KiwiSaver balances compared to women. 'It's a shame there are so few government incentives for a scheme that underpins private saving for retirement. I would at least have liked to see some of the savings from reducing government contributions be applied to serving those groups where we see the widest retirement savings gaps,' says the Retirement Commissioner. 'We also hope employers respect the spirit of the changes and understand why they were necessary, passing the savings onto their staff rather than including them as part of total remuneration - which should be banned.' The Retirement Commission will continue to explore the impacts of these changes as part of the 2025 Review of Retirement Income Policies (RRIP) with a focus on how the Government could most effectively reduce gaps in retirement income outcomes. Summary of the Budget 2025 changes • Employee and employer contributions move to 3.5% from 1 April 2026 and then to 4% from 1 April 2028. • A new temporary savings reduction will be introduced, modelled on the existing temporary savings suspension, allowing members to opt to reduce their contribution rate to 3% for a period of up to 12 months. Members can take multiple temporary reductions. If a member takes a savings reduction their employer can match them at that rate. • The government contribution matching rate is reduced to 25% (i.e. 25 cents for every $1 contributed up to a maximum government contribution of $260.72) from 1 July 2025. • Members with an annual income of more than $180,000 will no longer be eligible for the government contribution from 1 July 2025. • 16- and 17-year-olds become eligible for employer contributions from 1 April 2026 (note they will not be auto-enrolled. The age for auto-enrolment remains at 18, but if they join, or have already joined, and contribute, they will be eligible for the matching employer contribution). • 16- and 17-year-olds become eligible for the government contribution, if they contribute, from 1 July 2025.
The Spinoff
18-05-2025
- Business
- The Spinoff
KiwiSaver shake-up looms as government prepares budget reveal
Whether it's higher default contributions, means-tested government contributions or something else entirely, it's clear Nicola Willis has something significant planned, writes Catherine McGregor in today's extract from The Bulletin. A flurry of pre-budget spending promises With Budget 2025 barrelling towards us this Thursday, the government is continuing to lay the groundwork with a series of hefty pre-budget announcements. Sunday brought news of $164 million for 24/7 urgent care services in several regional centres, while Friday saw an announcement of $577 million over four years for increased film and television production rebates. Other recent announcements include $774 million earmarked for redress in state care abuse cases; $140 million for a new school truancy service; $100 million lift to the Elevate venture capital fund; $100 million for maths intervention teachers and tests; and $35 million to bolster Customs' work on drug smuggling. Will the KiwiSaver bar be raised? For all the spending announcements, there are still plenty of budget areas where the government is keeping its cards close to the chest. Among them is KiwiSaver. Nicola Willis has made clear she wants balances to grow – and it'll likely be through increasing the default contribution rate from the current 3%, the NZ Herald's Jenée Tibshraeny reports (paywalled). The Retirement Commission wants it at 4% (with a 4% employer match), while keeping the minimum contribution rate at 3% for workers who cannot afford to pay more. 'Introducing a higher default contribution rate would act as a signalling device to provide implicit advice on required savings levels,' the commission writes (PDF). What's more, 'due to the 'stickiness' of defaults it is anticipated that many people will remain at this default rate'. The Retirement Commission is currently undertaking its three-yearly review of retirement income policies, with public submissions open until June 30. Is the $521 a year safe? The other potential KiwiSaver change involves the government's annual member contribution of up to $521, which Willis hasn't ruled out means-testing. RNZ's Edmunds talked to fund providers about the idea, and while some support better targeting, others voiced concern. 'It shows where current Government priorities lie, when they are looking at cutting $1b of spending to help people's futures, so they can fund an extra $1.5b in NZ Super next year,' said Rupert Carlyon of Kōura Wealth. While Carlyon's implied worst-case scenario – binning the contribution entirely – seems politically implausible, means-testing is still on the table. In a recent editorial, the Herald suggested top tax-bracket earners should lose their eligibility. 'It would help free up funds and be an easy political sell. The majority of people, those earning less than $180,000, are unlikely to shed a tear for their wealthier mates losing their handout.' (As a self-interested aside, I was pleased to see the commission recommend the government actually increase the contribution for those who do not benefit from an employer contribution – e.g. those who are self-employed like myself.) Low balances underscore the need for reform Whatever form Thursday's changes take, there's little dispute that KiwiSaver in its current form isn't delivering strong enough retirement outcomes. Data for 2024 (reported by (again) RNZ's Susan Edmunds) shows the average balance remains a modest $37,000, while women's savings are on average around $8,000 less than men's. That's largely due to women taking significant breaks from paid work to raise children and being more often employed in part-time roles. Retirement commissioner Jane Wrightson says that while the gender pay gap is narrowing, the KiwiSaver gap has proven stubbornly persistent. 'Since women live longer on average than men and therefore have longer retirement periods to fund, for this demographic, a rethink is especially critical.' If Nicola Willis does announce an increase to minimum contributions this week, the numbers suggest many New Zealanders – especially women – will be better off for it.
