Kiwisaver is extraordinarily successful at attracting members and encouraging long term saving, a new report says.
The New Zealand Institute of Economic Research (NZIER) report contrasts with a Government joint agency evaluation of KiwiSaver published in February which concluded it was only marginally increasing net asset accumulation for members.
The Government joint agency evaluation was drawn on by the Treasury to develop a regulatory impact statement which concluded KiwiSaver had not substantially increased savings.
Given the conclusion, the Government cancelled the $1000 kick start payment in Budget 2015.
Financial Services Council chief executive Peter Neilson said the NZIER report focused on the people KiwiSaver was designed for - those who were likely to have a lower standard of income in retirement than when they were working.
The NZIER report found:
• KiwiSaver was likely to lead to an increase in net worth and a better standard of living in retirement for middle and lower income participants.
• For very low income people, such as beneficiaries and people with high incomes and high net worth, KiwiSaver was less likely to increase savings.
• KiwiSaver should also lead to more diversified portfolios in New Zealand, reducing concentration risks by shifting the balance of household asset holdings from housing to more broadly diversified equity and fixed income exposures.
Mr Neilson said since its inception in 2007, KiwiSaver had become by far the most widely held voluntary private savings vehicle in New Zealand.
There were now more than 2.5 million people in the scheme and 75% of the population aged 18 to 64 were members. Before KiwiSaver, only about 15% of the workforce were in occupation savings schemes and the number was declining, he said.
The NZIER report was concerned the evidence base for cancelling the $1000 kick start payment was too narrow.
Another potentially serious problem highlighted by Griffith University (Queensland) economist Professor Ross Guest and his colleagues was that the Treasury papers used non KiwiSaver members as a benchmark to compare KiwiSaver performance.
The analysis simply compared the results for the people in KiwiSaver with those who were not, as opposed to those in the target audience who joined KiwiSaver compared with those in the target audience who did not, Mr Neilson said.
''People on a benefit can't afford to save and are likely to receive a higher income from New Zealand superannuation than they received during their adult lives on a benefit anyway.
''At the other end of the scale, people who were saving for retirement by investing in rental property or a farm would be unlikely to use KiwiSaver other than to just pick up the KiwiSaver incentives.''
For the last group, KiwiSaver would probably not increase their savings. It would only change the composition of their savings. Neither of those categories were in the target group for KiwiSaver and should not have been used for comparison.
KiwiSaver was the most successful new savings innovation in the past 100 years and the findings in the report would be no surprise to most New Zealanders, Mr Neilson said.
Labour finance spokesman Grant Robertson said since National was elected in 2008, it had continually undermined KiwiSaver, with seven cuts in seven years.
''They have hurt the credibility of the scheme by talking down its effectiveness. National was scraping the barrel for reasons to cut the kick start.''
