National embrace of compulsory KiwiSaver could make a new New Zealand capitalism

Monday, 22 June 2026

National Party leader Christopher Luxon unveiled the policy at his party’s annual conference yesterday alongside his deputy, Nicola Willis.

Luke Malpass is associate editor at The Post.

OPINION: The National Party's superannuation plan is one of the most consequential policy shifts of the decade. It is a crossing of the Rubicon that will, over coming decades, most likely reshape both public finances and the structure of the economy.

It also marks a decisive shift in New Zealand politics: for the first time, there is likely to be broad cross-party agreement on a compulsory retirement savings scheme.

It reinforces the Paul Keating nostrum that good policy is good politics.

While Labour has not officially committed to compulsion, KiwiSaver is a core part of its political inheritance and strengthening it further should be welcomed. Chris Hipkins’ remarks about how National can’t be trusted on KiwiSaver, while grounded in truth, also sounded like the sniffy assessment of someone who has had a policy rug swept out from underneath him.

Straight after the Budget I wrote that the fight over the future of New Zealand Super starts now. It turns out it may instead become a contest over who can build the best KiwiSaver scheme.

Up until now, the National Party has resisted compulsion, largely on the grounds that people should not be forced to save for retirement through vehicles that effectively guarantee an income stream for fund managers.

There is an element of Nixon goes to China here - a compulsory system probably required the main party on the conservative side of politics to be on board.

It was, and remains for its opponents, a question of ideology and moral hazard. Taking away people's freedom and giving one sector of the economy the ability to clip the ticket on every wage and salary in the country — potentially 12% of income by 2032 — is, for some, an affront to personal choice.

The National Party should be applauded for finally crossing the compulsory superannuation line, writes Luke Malpass.

But the argument for compulsory retirement savings has never really been ideological. It is one of practical political economy.

First, if retirement saving remains optional, it will often be those least able to afford it or who spend lots of time out of the labour market (the ill, stay-at-home parents etc) who miss out. If that is a concern, governments can always provide targeted top-ups.

The broader question is how New Zealand reduces its long-term reliance on NZ Super and puts the scheme on a more sustainable path.

In theory, brave politicians could simply grasp the nettle. In reality, the only enduring way to reduce dependence on NZ Super is to ensure private savings are sufficient to support retirement.

In other words, the only long-term path to putting NZ Super on a sustainable footing is to boost KiwiSaver.

The Australian superannuation system turns 35 next year. Its Age Pension is means-tested and, this year, the fiscal cost of it is expected to fall in real terms.

Instead, much of the cost sits in “tax expenditures” — the Treasury term for tax concessions and incentives. Another, non-public accounting way to look at it is people keeping more of their own money.

Choices matter. Australia made its choice decades ago and is now reaping the benefits.

New Zealand's challenge is clear. By 2030, the NZ Super bill is expected to rise to $30.8 billion against total government spending of $167b.

The NZ Superannuation Fund is expected to defray only about 6.6% of the annual cost of NZ Super by 2060 and 12.7% by 2080.

That latter figure arrives well after most young people entering the workforce today will have retired.

The upshot is that a properly funded compulsory savings scheme would dramatically expand the options available to future governments while increasing the effectiveness of the NZ Superannuation Fund itself.

The next stop should be making retirement savings tax-advantaged — the compounding effect of which would significantly boost savings over time.

Bringing the rules closer to Australia's would also help address portability issues. That would mean taxing contributions on the way in and taxing returns, rather than New Zealand's current approach of post-tax contributions and PIE taxation on investment returns (top rate of 28%).

If this policy, or something like it, becomes law, the next budget surplus should begin making room for those tax concessions.

This is a victory for NZ First, which has helped push National into territory where it has not traditionally felt comfortable.

It is also a way for the National Party to be forward-looking without significantly increasing spending while still talking credibly about growing the economy.

This will be a massive boon to New Zealand’s funds management industry, to the local bourse and to a growing pool of domestic capital which - as it grows - will be looking for local things to invest in: equities, bonds, shares infrastructure and firms - along with global equities, infrastructure and the like.

It will mean more capital in the New Zealand economy. It is no coincidence that local infrastructure players will be excited. Regulated returns from infrastructure in stable countries are also a key part for any super fund. Look at Australia. Look at Canada.

This announcement will now all but lock in compulsion and at a minimum level of 12% of incomes, regardless of how the employer-employee split is ultimately structured.

This debate has been 50 years in the making.

Ever since Sir Robert Muldoon and his dancing Cossacks helped sink Norman Kirk's original scheme, New Zealand has largely relied on the Government simply paying a pension to everyone regardless of means.

The National Party should be applauded for finally crossing that line.

Now it is time for Labour to come to the party.

There is often a lot of cant about bipartisanship, but this is one area where a durable consensus could be locked in now, with future debates focused around the edges and how to help hard cases, rather than the fundamentals.

This will also give the smaller parties - ACT and the Greens - one which loathes compulsion and the other than loves universal policies, a point of differentiation.

But the broad direction of travel for most of the Parliament now appears set.

This — or something very close to it — looks increasingly likely to become law. On current numbers, NZ First will be required for any future government.

Winston Peters entered Parliament shortly after Muldoon and the dancing Cossacks helped bury New Zealand's original compulsory savings scheme.

Nearly 50 years later, he may end up helping bring it back.