New push to encourage private savings News items Home
26 May 2003
In a significant change of tack, the savings industry has launched a fresh initiative to get agreement among politicians, employers and trade unions on a formula to boost New Zealanders' private savings.
Launching its Saving New Zealand project today the Investment Savings and Insurance Association is moving away from its longstanding approach of urging people to save more for their retirement or pleading with the Government for friendlier tax rules on savings.
Instead, the new three-phased project aims to get a range of groups involved in setting a broad framework for private savings - before it attempts to address more sensitive detailed policies.
It wants to produce an enduring savings regime with widespread political, industry, employer and trade union backing.
The plan will show New Zealanders what retirement income they can expect from the state and how they can supplement this with their own savings - especially through workplace superannuation schemes.
"At the end of last year we looked at how effective our efforts were in promoting the need for change," ISI deputy chairman Ross Kent said. "We found that there was a broad understanding about the need to save, but otherwise it just hadn't been working.
"It seemed there was a lot of interest in savings issues around the market, but little of that was borne out in individual, political or media comment."
Much of the superannuation debate in the past decade had been "adversarial" and centred on the state-provided pension, Mr Kent said.
It was now time to focus on sustainable rules for private savings - not just for retirement, but for education, buying a house, health needs or retraining for a job.
"The debate has been pitched at an adversarial level for so long," Mr Kent said. "But we are all basically in the same tent and we need to get discussions going on the issues."
The ISI believed that private savings had been stifled by the public's confusion and general lack of understanding about how and why they should save.
"Understandably, there is some reluctance to lock savings away for a long period when the immediate future appears so uncertain and there are other spending priorities such as health and education."
The new project has been set out in three phases:
Stage one: Discussions with employers, unions, politicians, economists to "test the water" on creating a "different" approach. Most political parties had already been contacted.
Stage two: Development of a savings issues paper, before a savings forum to be held in late July.
Stage three: Development of policy detail.
"I think it's realistic to expect that we would get through the process in sufficient time for detailed policy parameters to be developed for party manifestos going into the next election (in 2005)," Mr Kent said.
The project comes as the Government changes the rules for workplace superannuation schemes to ensure employer contributions are taxed more in line with individuals' marginal tax rates.
The number of people in workplace super schemes has fallen dramatically - in 1990 there were 333 such schemes covering 22.6 per cent of the workforce. By 2001, the number of schemes had fallen to 263 (though many stand-alone schemes had been folded into master trusts) covering only 14.6 per cent of the workforce.
Other changes are being considered to encourage more people to save, though the Government has ruled out broad-based tax breaks.
