NZ is ageing into a financial mess. Here are five bold ideas to fix KiwiSaver before it's too late

Sunday, 15 February 2026

The Retirement Commission’s recent report gave us ten years to make critical changes to our retirement system to ensure it remains fit for purpose.

As our population ages and more retirees come to rely on fewer taxpayers of working age, the runway to make the changes we need is shortening with every passing year.

The good news is that politicians are paying attention. Major parties are talking about increasing contributions and making tweaks to strengthen our system.

But the five experts we spoke to want to see this issue taken more seriously, so that we can make meaningful changes that help New Zealanders build generational wealth.

The question now is whether our politicians will heed the call and put forward ambitious ideas in the lead-up to the upcoming national election or keep things safe to avoid rocking any boats.

So, what exactly does real change look like according to those working on KiwiSaver issues every day?

Subsidise our kids

Kernel Wealth founder Dean Anderson says if he could redesign KiwiSaver incentives from scratch, he would fund kids’ accounts from 0 to 16.

“By shifting the Government contribution from effectively middle-class tax credits to fund kids’ accounts, you’d lower the cost to the Government, and you’d get Kiwi kids engaged with saving and investing early, setting them up for generations to come.”

As things stand, the Government gives KiwiSaver contributors $260 per annum, provided they contribute at least $1042 over the course of the year.

The National-led coalition recently reduced the Government contribution from $520 to $260, but these contributions will still cost the $500 million a year.

Anderson’s argument is that by shifting the subsidy to only kids’ accounts, it will incentivise parents to get their children involved in KiwiSaver earlier and set them up with a better nest egg as they start their lives. It will also have a lower annual cost, given there are fewer 0-16-year-olds than there are 16 to 65-year-olds.

Change the tax rate

The unseen structural makeup of a policy can often make a huge difference in terms of how effective it is.

Kōura Wealth founder Rupert Carlyon says he would target tax as a way to get Kiwis to contribute more.

“The biggest change I would like to see in KiwiSaver are incentives to get people to contribute,” he says.

“We could implement a model similar to Australia where KiwiSaver contributions are taxed at a lower tax rate. This will actually provide an incentive for people to lock up their money and save for their retirement.”

Australian Super is charged a flat rate of 15%, whereas KiwiSaver uses a tiered system ranging from 10.5% to 39%, depending on your income. When it comes to earnings, Australia once again charges a flat 15% (except for those who have balances exceeding $3 million from July), while New Zealand’s prescribed investor rate ranges from 10.5% to 28%, once again depending on your income over the last two years.

Carlyon believes that by making the tax rate more attractive, you would actually give investors a reason to leave their money locked up until they’re 65.

He goes a step further by saying we could pay for this by introducing means testing for NZ Super, which would super payments contingent on your level of wealth.

Any change of this nature would be politically fraught, but means testing is already used in Australia. And it doesn’t necessarily mean you either qualify or don’t. The Australian system has been designed so that retirees can qualify for a part pension depending on how much wealth they have. Means testing in Australia also excludes the family home from the age pension assets test, regardless of its value (owning a family home does, however, reduce the asset limit).

Contribution increases

David Boyle, the general manager of KiwiSaver at Fisher Funds, doesn’t even hesitate: “Contributions are king,” he says.

“We were encouraged by the increases announced at Budget 2025, and that there have been policy announcements from two political parties at the end of last year,” says Boyle.

Both National and NZ First have clearly indicated the desire to increase contributions over time.

However, as things stand, there’s no guarantee that these two parties will be in power after November’s election.

For greater clarity on what might happen, we will need to see what the other parties bring to the table on the topic of retirement.

“KiwiSaver is already high on the agenda for Election 2026, and we will watch this with great interest,” says Boyle.

A bipartisan commitment

Ana-Marie Lockyer, the chief executive of Pie Funds, tells me the key change she’d like to make would have to happen at a political rather than legislative level.

“The most important thing for me is not so much a change to the scheme itself, though there are certainly some improvements needed, but something more strategic: political consensus on a long-term KiwiSaver vision and settings,” Lockyer says.

“What that looks like to me is a clear, cross-party commitment to gradually increasing KiwiSaver contribution rates over time, with changes well signalled in advance so households and employers can plan.”

Lockyer says the system depends on predictability and cannot fluctuate ever three years with the electoral cycle.

“There is some evidence of political alignment in the direction of travel,” she says.

“Contribution rates are now rising and multiple parties have signalled support for higher savings over time. But alignment of intent is not the same as alignment of framework. What we don’t yet have is a durable, bipartisan pathway that locks in predictable, staged increases over the long term.”

Asked whether she thinks politicians will have the guts to work together, she admits it won’t be easy.

“It will require political courage, but it’s achievable if it’s framed properly,” she says.

“Gradual, well-signalled increases with cross-party backing are far less politically risky than being forced into sharper adjustments later. Kiwis generally support saving for their own retirement. What they want is fairness and predictability along the way.”

Compulsory contributions

As things stand, KiwiSaver remains voluntary. Employees choose whether to participate and employers are under no obligations to put in contributions if their staff aren’t interested.

The fact that many New Zealanders still don’t contribute leads to Simplicity founder Sam Stubbs saying compulsion is necessary.

“I’d make it compulsory for all salary and wage earners,” he says.

“Why? Because those who don’t have KiwiSaver are the ones who most need it. And it’s sensible to save a little when you’re getting paid. As my grandmother said ‘Save the cents, and the dollars will look after themselves.’”

He would like to see the compulsion applied to employer contributions, as is the case in Australia.

“It could start at 3% and rise 0.5% per annum to make it easier for employers to absorb in their cost of doing business over the long term. Employees could contribute more if they wanted to. It would be simple, predictable and fair.”

An added bonus, says Stubbs, is that by making it compulsory, the Government contribution could be diverted to other areas because there would no longer be a need to incentivise participation.

“They could use that $500 million a year on other things like hospitals,” says Stubbs.

So which of these ideas appeals most to you. How would you like to see KiwiSaver evolve? And how much does KiwiSaver matter to you this election year? Let us know in the comments below. If you’re an app user, you’ll need to view this story on mobile web to join the conversation.