Friday, April 07, 2006

KiwiSaver scrutinised by the Wall St Journal

The Wall St Journal says KiwiSaver is a lemon. Here the NCPA identifies why;

More worryingly, KiwiSaver does little to address the root cause of New Zealanders' atrocious savings habits; namely, the country's generous welfare system:

* Today, Wellington guarantees 65 percent of the national average wage upon retirement at age 65.
* These payments aren't income or asset tested, meaning everyone receives the same treatment, regardless of wealth.

Observers ask: Why would New Zealanders save today if the government will look after them in their old age?

And, in the meantime, why should New Zealanders earn too much and accumulate assets when they'll lose their state benefits or be forced to start paying child support or paying back their student loans?

1 comment:

Nichlemn said...

Asset and income testing are stupid ideas - we get the same problem as Working for Families: marginal incentives. Why would anyone work if they're getting taxed at 60c in the dollar, then the interest from their savings is taxed at the same rate, and after all that, their savings is still only worth 80% due to the super being drawn back?