No crisis, but no room for complacency, says retirement income group
Periodic Report Group 2003 chair Vance Arkinstall says that while New Zealand's current mix of private savings and a universal pension is working for people who are currently retired, there is no room for complacency about how well the system will provide in the future.
The six-yearly Periodic Report Group released its "Retirement Income Report 2003" today. The report says that, as in most other developed countries, New Zealand's ageing population is likely to lead to increasing pressures on the sustainability of New Zealand Superannuation after 2011.
"The report does not recommend any radical departures, but it does set out challenges for employers, the financial sector, and government. It also sets out a challenge for all New Zealanders to start planning and saving now for their retirement."
"Economic growth is critical to enabling more New Zealanders to set aside money for their retirement", Mr Arkinstall says. "Savers are facing new risks to their retirement savings, like higher household debt levels, student loan debt, and lower levels of home ownership".
The report recommends the establishment of a Work-based Savings Group to promote work-based savings, and remove barriers to the participation of employers and employees. It also identifies the need for more education and information so people can make better financial planning decisions.
Specific education programmes need to be targeted at women, Maori, and Pacific peoples, all of whom face particular social and economic barriers to saving for retirement.
While the report doesn't recommend tax incentives for savings, it does recommend that distortions in the current tax system need to be removed.
Mr Arkinstall says that the Report Group did not find that major changes were needed to the regulatory environment for financial advisers. "Investors require confidence in the quality of the advice they receive and we do see merit, in improving the existing self-regulatory regime", Mr Arkinstall says.
"We also consider that policy reviews occurring only once every six years are not adequate to sufficiently inform on retirement income policy. We've recommended the six-yearly review be replaced with an ongoing work programme that incorporates the recommendations in the report."
The full report can be viewed at www.treasury.govt.nz/prg
For further information and comment:
Vance Arkinstall, Chair
Periodic Report Group 2003
04 473 8730 (work)
04 566 1489 (home)