John Roughan on KiwiSaver

 

John Roughan: Hager's horror the only thing ringing hollow

 

The scheme celebrated its first birthday on Tuesday with 718,000 members - more than double the number predicted in the first year. The only people complaining about it are those annoying economists who see the difference between individual gains and the national welfare.

They fear the scheme will not add to total personal savings, merely displace previous savings schemes.

In the Herald last weekend Maria Slade reported an estimate that as little as 9 per cent of the money in KiwiSaver accounts so far is new saving, a percentage the researcher reckoned would not cover the administration and compliance costs of the scheme.

Westpac economist Dominick Stephens said KiwiSaver had cost the taxpayers $497 million in its first 11 months, an amount that could have added to national savings if it had been left in the Budget's fund for future public pensions.

Even that fund is questioned by some savings professionals who point out that a superannuation scheme is only as good as the future economy that will have to pay out. From that point of view, the best retirement insurance is the investment made in the economy today.

Anyone who believes that the best investments are made by those who stand to lose if they get it wrong would argue the economy would be stronger in the long run if the KiwiSaver incentives were turned into personal tax cuts.

I generally try to avoid cut and pasting so much from an article, but John Roughan's points are irrefutable! 

I'm a signed-up member of KiwiSaver just because the incentives are too good to pass up.  Now some people like KiwiSaver because it locks away their savings so they can't touch it. 

So why don't they give people the choice... Kiwisaver for those who want their savings locked away & a tax refund for those who want to put the money into their own savings account.  I'd take the latter option. 

 

Kiwisaver , John Roughan