Your next vote could determine the financial future our kids enjoy
Tuesday, 25 November 2025
Any changes made to KiwiSaver settings today are not going to have a significant impact on older New Zealanders.
National’s plan to incrementally increase employer contributions to 6% by 2032 is about how our retirement system should evolve to better meet the needs of generations who will retire decades from now. This is a policy built for younger New Zealanders - our kids and our grandkids.
The promise of increased KiwiSaver contributions isn’t an immediate giveaway in the usual lolly scramble sense we often see from politicians. It’s a long-term play that comes with the benefit of compounded growth over time for those who still have the most time in the workforce.
It’s a policy that takes nothing away from the current generation in entitlements, but also sets in motion changes that will be valuable for the next generation.
This is one of the first major policies we’ve seen from National, and it throws down a significant challenge to other parties on this issue.
“This is clearly now a KiwiSaver election,” Simplicity founder Sam Stubbs tells me.
“This is a real U-turn for National towards seeing KiwiSaver as being a way for us to save to prosperity…
“The ball is going to be firmly in Labour's court as to how they respond to this because arguably, National has leapt to the front and has almost claimed the KiwiSaver crown by talking about increasing contributions.”
Stubbs says the changes made after this election will be hugely influential in the coming decades.
“This will be one of the turning points in New Zealand’s economic future,” he says.
“We will look back on this like the Australians look back on the Paul Keating decision in 1985 and realise, wow, that was one of the smartest things we've ever done.'
At the time when Keating first introduced employer contributions across the workforce, Super assets in the country sat at around AUD$40 billion (built largely by union-based pension funds). Today, because of that system introduced four decades ago Super assets sit at AUD$4.3 trillion ($4.95 trillion).
In practical terms, this means a 65-year-old Australian has an average balance AU$420,000 (NZ$482,000), while the New Zealander of the same age will only have around $70,000 in KiwiSaver.
The notion that New Zealand will suddenly catch up with Australia simply isn’t true, but incremental increases in savings will make future generations wealthier by the time they reach retirement.
The same number doesn’t mean parity
In announcing the policy, National leader Christopher Luxon said that raising the employer contributions to 6% combined with 6% employee contributions would lead to our system matching Australia.
This is true in the sense that Australia currently has a 12% contribution rate, but there are some important differences.
Australia’s 12% comes from a compulsory (this word is important) contribution over and above the worker’s salary. Workers in Australia are then also free to contribute additional funds voluntarily if they want to.
The New Zealand system will still rely on voluntary contributions, which will then be matched by an employer.
“At some stage, politicians do need to address compulsion because KiwiSaver now risks discriminating against the poor,” says Stubbs, explaining that those who feel they can’t afford the contributions may decide to push it out, hurting their longer-term prospects.
Stubbs says there’s an opportunity for the Labour Party to match National’s promise, but then also make KiwiSaver contributions compulsory.
“There’s a real opportunity for one of the parties to grasp the mantle of making KiwiSaver compulsory from birth,” Stubbs says.
Since 2015, the Green Party has called for a Kids’ KiwiSaver Policy, which would provide newborns a kickstart deposit of $1000 as well as ongoing contributions to incentivise savings until they are 18.
NZ First has also weighed in on the issue, promising compulsory 10% KiwiSaver and tax cuts, but Simplicity chief economist Shamubeel Eaqub has questioned whether this would be feasible.
The other missing piece
There’s also more we can do in this space.
Rupert Carlyon, the founder of Kōura Wealth, wants to see our politicians use this opportunity to finally do away with total remuneration employment agreements.
Employers who adopt a total remuneration approach include all non-cash benefits (for example, gym memberships and KiwiSaver) in gross pay. In these cases, the employer’s KiwiSaver contribution isn’t paid on top of the worker’s salary but rather included as part of gross pay.
“According to the Retirement Commission, almost half of employers use total remuneration for some employees, and that number appears to be growing,” says Carlyon.
These agreements were initially introduced by the National Government in 2009 to support businesses that were struggling in the aftermath of the GFC, but the Retirement Commission has now called for them to be discontinued.
“If an employment contract has a total remuneration clause in it, employees can opt to take cash instead of KiwiSaver contributions,” says Carlyon.
“For those that have those in their contracts, there is no incentive at all to contribute to KiwiSaver”
If we are serious about getting people to contribute consistently, Carlyon believes we neeed to create a system that consistently incentivises the type of behaviour we’re looking to encourage.
Once again, this feels like an opportunity for a political party to step in and claim as part of their KiwiSaver approach.
Piecemeal thinking
There are good KiwiSaver ideas being aired across the political spectrum, but what we don’t yet have is a consensus on what should happen.
The Retirement Commission’s triennial report on the state of the sector, released earlier this month, called for a cross-party accord on this issue to give Kiwis certainty of what could happen to the retirement sector.
It’s a message Retirement Commissioner Jane Wrightson reiterated to me after National’s policy announcement.
“It is encouraging to see parties engaging with retirement income issues, but the approach we're seeing right now demonstrates exactly why we need a different framework,” she says.
“When each party proposes different contribution rates or eligibility settings without considering how those changes interact with the broader system, we risk making decisions that don't serve New Zealanders well.”
Wrightson advises against “piecemeal policy changes” that undermine certainty in the system.
“Retirement income settings affect generations, so decisions must be guided by evidence and long-term thinking, not short-term politics… Without consensus, we risk repeating past cycles of policy instability and missed opportunities.”
This might be true, but each political party will now be looking to differentiate what they offer from the others, meaning that New Zealanders may have to vote in line with the policies they deem most sound – something that’s easier said than done when it involves changes that will only come into full fruition over decades.
What about Super?
Asked whether there was any possibility of Super being means tested, Luxon was emphatic this wasn’t part of National’s plan.
As things stand at the moment, it would be difficult to introduce any form of means testing.
Australia, for instance, has only been able to do this because of how effectively their system has enabled residents to increase their personal savings.
As personal savings rose, dependency on the state pension has lessened. These two levers need to operate together to ensure our elderly aren’t left in the lurch.
The number of Australians receiving at least some state pension has dropped from 70% in 2012 to 56% this year.
That doesn’t just happen organically. It happens because of deliberate policy decisions that have made Australians less reliant on just the pension.
Today, the cost of our superannuation is at roughly 5% of GDP. The cost of Australia’s system is sitting at about 4.8%, but direct spending on the pension only makes up 2.6%. The other 2.2% comes from tax incentives related Super contributions.
Because Australia has used both of these levers, the cost of its retirement scheme will remain the same level in the future or even drop over time, whereas our over-reliance on NZ Super will only become more expensive.
No matter where you sit on the political spectrum, the importance of using that other level and boosting our personal savings will only become more important in the coming decades.
The vote we cast in the next election could play a critical role in determining how prosperous we (and, more importantly, our kids) are in the future.