The beginning of the end of NZ Super? Eight unanswered questions on National’s about-face on KiwiSaver
Monday, 22 June 2026
ANALYSIS: National has embraced KiwiSaver after multiple instances of cutting the superannuation scheme off at the knees.
On Sunday, it announced that if elected in November’s general election, it would make KiwiSaver compulsory and progressively lift employee and employer contributions to 6% of gross (before tax) income to a combined total of 12% by 2032.
But there remain many unanswered questions about its policy, including whether the party sees it as a first step on the road to cutting NZ Super payments, or lifting the age of eligibility for NZ Super to 67, or even 68, as the British are doing.
Is 12% enough?
National’s stated aim is to get KiwiSaver contributions to a combined 12% to match Australia by 2032.
But matching Australia’s contribution rate isn’t necessarily the path to create the pensions future that New Zealand needs.
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Just last week a paper was published by the Retirement Income Interest Group of the New Zealand Society of Actuaries asking whether 6% plus 6% was the right number.
It considered the question against the idea that NZ Super entitlement remained unchanged, and against the idea that the aim should be for savers to have enough to replace at least 80% of their pre-retirement income.
It concluded that for a median earner right in the middle of the income spectrum, 6% plus 6% from the age of 22 (taking into account the continuance of NZ Super) was about right, but it could drop to 5% plus 5% for savers who didn’t take money out to buy a first home.
However, for minimum wage earners, 6% plus 6% was “excessive”, and for this group the reduction in consumption before retirement may be more consequential, particularly during periods of higher expenses such as childcare or mortgage servicing.
And, if the age of eligibility for NZ Super went to 67, there was an increased chance that 6% plus 6% was excessive for median earners.
Why is National doing this at all?
The unspoken subtext for making KiwiSaver compulsory, and increasing contributions, is that some time in the future, the Crown will be able to spend less on NZ Super.
With an ageing population, the combined cost of NZ Super and healthcare is forecast to increase on current policy settings, but Prime Minister Christopher Luxon didn’t touch on that topic in his speech to party faithful on Sunday
Having a bigger pool of KiwiSaver money locked away until age 65 may make it easier to do things like lift the age of eligibility for NZ Super or to reduce the amount people get, for example through means-testing, differing tax rates for superannuitants, or de-linking rises in NZ Super from increases in inflation.
But the point made by many in the funds and retirement industry is ‘Why aren’t we talking about this?’
For John Berry, chief executive of Pathfinder, there are many unanswered questions, and once again, changes to KiwiSaver do not feed into a joined-up retirement income strategy.
“We can’t just do KiwiSaver in isolation,” Berry says.
He is especially annoyed that KiwiSaver is being treated as an election issue, when New Zealand should be like other countries, and have broad cross-party accords on pensions policy.
There is a brighter way of seeing this.
Kirk Hope, chief executive of the Financial Services Council, sees a future in which the country arrives in 2038/39 with more than $1 trillion in KiwiSaver, which generates a huge amount in tax for the country’s coffers, making it easier to pay for things like NZ Super.
Will this ultimately mean the end of government contributions?
When Labour’s Michael Cullen created KiwiSaver it used world-leading “soft” compulsion, where people were automatically enrolled, but could then choose to opt out.
Part of the deal to stay in was generous government contributions of up to $1040-a-year. New Zealand was in surplus at the time and these were widely seen as tax returned in the form of locked-in savings.
In 2011, a National government halved the government contribution. Then in 2025, it halved it again to a maximum of $260.72.
But if KiwiSaver is compulsory, why is there a need for a government contribution at all?
Could we get a second slice of compulsion one day?
Assuming all goes to plan, New Zealanders will end up with large KiwiSaver nest eggs.
Overseas, policymakers have set rules to say what they can do with the money because they don’t want people frittering it on cruises and then falling back on welfare support from the state.
In the UK, for example, people have to spend a large portion of private pensions buying lifetime incomes using things like annuities.
Might New Zealand follow suit? Only time will tell, KiwiSaver experts say, though they stress that New Zealand lacks an annuity market and also lacks the generous tax settings that give UK politicians the moral right to impose restrictions on what people do with their money.
Will this encourage more employers to switch to contracting?
When a business takes on an employee, they will be caught by the compulsion rules, having to pay 6% employer contributions by April 1, 2032.
But if they decide instead to take people on as self-employed contractors, they could avoid having to make employer contributions.
Under National’s plans, self-employed individuals would be required to contribute only the equivalent of the employee contribution.
KiwiSaver providers see that as a positive as it brings the self-employed into KiwiSaver.
“This means someone who is self-employed from July 1, 2028 will be required to contribute 4% of their income to their KiwiSaver (not the combined rate of 8%,)” National said.
However, in a perfectly rational world, that would mean the employer would pay contractors they take on instead of employees more to compensate them, but whether that happens would need to be confirmed.
Can Labour steal some KiwiSaver thunder back again?
Labour created KiwiSaver, National weakened it.
Now Simplicity’s Sam Stubbs thinks National has stolen Labour’s KiwiSaver mojo, but that it could get it back again, at least with its voting core.
His suggestion would be for Labour to campaign on making employee contributions voluntary but employer contributions compulsory.
That would mean that lowly-paid people could finally get a chance at using KiwiSaver, but not have to scrimp and save to do so.
Will National close the hated “total remuneration” loophole?
A law change when National took power in 2008 created what Labour called “loopholes” that allowed employers to strike individual agreements with employees under which they could deduct their employer contributions from those employees’ salaries.
Labour should also campaign on a promising to end employer use of “total remuneration” contracts, which are a loophole allowing employers to effectively contract out of having to make employer contributions to KiwiSaver, Stubbs says.
Total remuneration contracts are not mentioned in National’s policy announcement, but it confirmed it was not planning on doing so.
“Phasing out total remuneration packages is not part of the policy National announced yesterday, but we are open to considering it,” the party said in a statement to The Post.
Is National’s policy ‘fair’?
Berry says sustainable, long-term pensions systems have to be fair.
Nobody is asking whether National’s policy is “fair for all New Zealanders”, Berry says.
KiwiSaver has been criticised by some as a machine for increasing “inequity” because the amount people end up with is tied to the amount they contribute, and people who earn more, contribute more.
That’s led to some calls for the government contributions to be stripped from people earning $100,000 or more, to free up money to pay higher government contributions to lower-earners.
But there’s also intergenerational fairness.
Tyler Groenewald from the Generation Screwed political lobby group, says: “Young New Zealanders are being asked to pay more into KiwiSaver while politicians refuse to touch the biggest retirement cost in the system.”
He said: “Young workers now face a double burden: compulsion to pay for their own retirement and compulsion to pay for everyone else’s. KiwiSaver reform and superannuation reform cannot be separate conversations.”
That’s not to say intergenerational fairness may not be on the way, if increased KiwiSaver nest eggs lead to future governments cutting NZ Super entitlements.
In a recent paper, economist Leonard Hong, and professor Robert MacCulloch, who works at the University of Auckland Business School, argued: “Mandatory savings have been shown to work in nations like Australia and Singapore. They provide an unorthodox but a more seamless pathway out of fiscal crisis, and in contrast to rapid increases to taxation, monetisation of public debt, or harsh fiscal austerity measures.”