Dollars and Sense: Compulsory KiwiSaver has a property loophole banks will exploit
Monday, 6 July 2026
Senior business reporter Rob Stock answers your money questions. Got a question for Sunday magazine? Email it to sundaymagazine@stuff.co.nz
QUESTION: Surely National’s compulsory KiwiSaver plan will be undermined by high property prices and bank lending policies. Am I wrong?
ANSWER: I love this question, because it is timely. It actually constitutes a question I missed in my recent list of “unanswered questions” about National’s KiwiSaver policy.
Come 2032, it may seem as though you will never have to read another column/article about retirement saving.
It’ll all be sorted for you by Granny National’s compulsory KiwiSaver (assuming they win power at the polls in November). If that happens, by 2032 you will be saving 6% of your before-tax salary into KiwiSaver, and your employer will be chipping in 6% on top.
But, of course, life is never that simple, is it?
There are so many loopholes in National’s KiwiSaver plan that large numbers of people will still need to think carefully about how to use KiwiSaver.
Many people, on current settings won’t be getting the 6% plus 6%, and as you hint, some will have already pre-spent the money.
Read More:
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They will include the poorly-paid, who can prove they are in financial hardship, and the self-employed, and the people contracted employed as “contractors”, or on a “total remuneration” contracts from employers lacking community spirit.
And, of course, some of the money that ends up in KiwiSaver accounts will replace money that now comes from NZ Super. Anyone who believes that National’s plan in the long term is to wind down NZ Super replacing it gradually with private savings, was born yesterday. That is the long-term direction of travel. Step one will be to raise the age of eligibility to 67, or 68.
Younger people will have to figure out how to factor that into their plans.
And, as this question shows, there is a property loophole in KiwiSaver.
The truth is that people take things like KiwiSaver, and use them in their own ways, adapting their finances to achieve their ends, which are not always wise.
Banks do the same. They ask how much people have in their KiwiSaver accounts, and how much they are contributing, when deciding whether to lend to people to buy homes, and for how long those home loans will run.
They are happy to lend to people with mortgage terms that end after age 65, even after 70, to people who have KiwiSaver nest eggs. It’s one of the ways they help people pay more for homes than is good for them.
Banks know that come age 65, they can get their loans repaid with part of the KiwiSaver retirement nest egg.
That means for many older workers, when they are looking at their KiwiSaver balances, they have to perform mental calculations netting it off against the debts they will have to use part of it to pay off.
Our wealth in retirement is made up of more than our KiwiSaver nest eggs, of course.
There’s other savings, cash, business, chattel and property wealth. All of that has to be turned into retirement income.
No, seemingly simple as it is, National’s KiwiSaver plan for compulsion is not as simple as it seems at first blush.
We will all have to keep a weather eye on how we are tracking for a decent retirement, what the politicians are signalling on NZ Super, and we will have to make active decisions along the way, including which fund manager to be with, and what kind of fund to invest in.
Disclaimer: The information in this column is provided for general information only and is not intended as financial advice. If you require expert advice we encourage you to seek assistance from a professional adviser.