NZIER warns higher KiwiSaver contributions could hurt low-income households

A recent NZIER study warns that increasing KiwiSaver contribution rates, or making them compulsory, does not guarantee higher retirement savings for all New Zealanders. While some households could reallocate existing savings with little impact on spending, the analysis shows single parents earning $50,000-$75,000 and couples with two children earning $75,000 each would experience a shortfall at rates above 4 percent. The paper highlights a trade-off between future retirement preparedness and present-day financial resilience, noting that many families already carry debt and could be forced to borrow more or slow debt repayment.

Self-employed workers, who currently have lower participation, may find compulsory contributions especially burdensome. NZIER also questions whether higher balances would meaningfully reduce future NZ Super costs without clear policy adjustments. The institute urges policymakers to identify which households are at risk and to weigh the impact on current living standards before imposing higher rates.