Government will have to front up to super cost, KiwiSaver providers say

KiwiSaver providers say the government might have made the decision to make retirement settings an election issue, rather than a Budget one - but they will have to be addressed at some point.

It was reported on Thursday that Finance Minister Nicola Willis acknowledged that New Zealand's superannuation system would need to be changed.

Speaking to the issue in the Budget lock-up, Willis said she wanted to "dwell on it" given the size of the problem.

"This is not a tomorrow problem, it's for today," she said. "People often talk about the rising super bill as if it's something in the future. It's happening right now.

"I believe ... in the absence of doing anything about our settings for the future, we will be committing a huge act against inter-generational equity."

Kernel founder Dean Anderson said it was the elephant in the room.

"Again, no conversation around superannuation age or KiwiSaver access age. Superannuation is now the second-biggest expense behind healthcare. It's really disappointing that again we seem to be just continuing to kick the problem down the road rather than come up with a structured plan. It's frustrating that nobody seems to want to address this and talk about the problem.

"Everybody was expecting that this is a year to maybe have a conversation around KiwiSaver and retirement. I think we're all warm for it. We're willing to embrace the change and understand actually that the levers can be pulled in a positive outcome for KiwiSavers.

"But nobody seems to be bringing anything to the table. Now, whether they're all holding their cards back until the election, who knows? But the fact that nothing's been built into the Budget sort of signals that we're probably not going to expect any change this election."

He said it was surprising that KiwiSaver had not been mentioned at all.

"If we're serious about generational fairness and long-term prosperity - and the minister is right that we should be - then the conversation heading into the election has to include the structure of retirement itself. Lift the age of NZ Super to 67. Lower the KiwiSaver access age to 60. Build a genuine bridge between working life and the pension. That's the kind of reform that matches the rhetoric."

Rupert Carlyon, founder of Koura, said Willis had acknowledged the system was untenable but was not doing anything about it. "At what point does she make the decision that actually this is really important and it's going to be a bottom line for us?"

Greg Smith, investment specialist at Generate, said it was understandable that the government had prioritisied repair, resilience and control over new giveaways.

"But if ministers are simultaneously acknowledging that retirement settings 'need to change', then it's fair to say this Budget felt like a disappointing opportunity missed: retirement savings reform is one of the few practical levers that can improve long term sustainability without lifting taxes or materially cutting core services, and it's politically easier to phase KiwiSaver defaults than reopen the NZ Super debate. The cost of living constraint is real, so nobody's arguing for an overnight jump - but 'gradualism, not inertia' matters, and a clearer signal - and firmer timetable toward higher default contributions over time would have been a constructive, future focused step."

Simplicity chief economist Shamubeel Eaqub said he was not expecting anything in an election year.

"I think people put far too much expectation on the Budget, which is an exercise of what you're going to spend your money on next year, versus, I think, what happens during the election campaign, which is about what you're going to do over the course of your term."

He said while some people had predicted changes to KiwiSaver settings, it would have been a political miscalculation to do anything to the scheme that could weaken it.

"At a time when the political conversation is moving towards how can we strengthen it."

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