KiwiSaver retirees need more advice panellists say
New Zealanders could get better results from KiwiSaver if they had more help managing their savings after retirement, according to panelists at a recent Mercer conference. The discussion centered on the decumulation phase — the period when retirees start drawing down their balances — and the lack of structured support for it.
New Zealand ranks 17th in global pension index
Mercer’s latest global pension index gave New Zealand a B grade and placed it 17th out of 52 countries. The Netherlands took the top spot, while Australia earned a B-plus. New Zealand scored well for integrity and was ahead of the average for sustainability, but fell below average for income adequacy.
Mercer New Zealand chief executive Anna Scott said the system offered a good foundation but could be improved. Dentons partner David Ireland noted that without universal NZ Super, the scheme would score much lower.
Ireland pointed to a key gap: the lack of any help for people when they turn 65 and can access their KiwiSaver money. The more successful the scheme and the larger the balances, the greater the risk that someone might spend it all on a “pipe dream” at 65, he said. “When you get to 65 you’ve still got a third of your life ahead of you.” Mercer chief investment officer Kylie Willment agreed that both New Zealand and Australia could do more on decumulation. She asked how to set up structures, retirement income solutions, and access to quality advice that helps people not only with their KiwiSaver balance but also brings their whole personal assets into the picture to “really optimise their retirements.” Willment highlighted key differences between the two countries’ schemes: easier early withdrawals in New Zealand, and Australia’s preferential tax treatment. In Australia, she said, managers worry less about liquidity because withdrawals are less common, so investors often have a higher allocation to growth assets — which helps boost balances.
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The decumulation challenge is not unique to New Zealand, but it has a particular edge here because KiwiSaver is still relatively young. Many members are only now approaching retirement with meaningful balances, and the system was built around accumulation — getting money in — not drawing it out wisely. Without advice or default income products, retirees are left to figure out the spending phase on their own, which can lead to either overly cautious spending or rapid depletion.
Decoupling NZ Super from KiwiSaver could offer flexibility
Panelists suggested there was merit in decoupling the age at which people can access NZ Super from KiwiSaver. That could give the government more flexibility to increase the pension entitlement age while still allowing people to access their KiwiSaver money earlier if needed.
Ireland noted a positive feature of KiwiSaver: it is managed through Inland Revenue, avoiding the problem of multiple accounts that Australia faces. He also said it was encouraging that KiwiSaver was being discussed in the lead-up to the election. “Maybe politicians can have a mature conversation to lock in some agreement as to the fundamentals.” But panelists warned that confidence in the scheme could be shaken if there are too many small, frequent changes. The risk of tinkering — rather than a stable, long-term framework — was a concern they raised.
The disposable plastic plate phenomenon illustrates a similar pattern of convenience without guidance, where easy choices can lead to unintended long-term outcomes.