Wellington Leads in KiwiSaver Balances, Highlights Economic Disparities

Recent data from New Zealand’s largest KiwiSaver provider reveals significant regional disparities in average savings balances. According to the report, residents of Wellington hold the highest average KiwiSaver balance at $44,863, closely followed by those in Taranaki at $40,562. In contrast, the regions with the lowest balances are Northland at $33,830 and Gisborne at $33,673, highlighting a concerning trend in income inequality across the country.

Fiona Mackenzie, managing director of ANZ Funds Management, emphasized that the disparities in KiwiSaver balances reflect broader economic inequalities. “Our hypothesis is that income variation is the biggest driver,” she stated. The average household income in Wellington was reported at $162,400, compared to $123,900 in Northland and $133,200 in Gisborne. Mackenzie expressed concern that the KiwiSaver scheme might be exacerbating existing inequalities, including gender and ethnic pay gaps, as it is closely tied to PAYE incomes.

Mackenzie noted that the KiwiSaver scheme, established 18 years ago, is not effectively preparing individuals for a comfortable retirement. “The answer is not really,” she remarked, indicating that while the system has seen significant participation, many individuals are not on track to achieve adequate retirement savings. If the current disparities remain unaddressed, they could lead to increasingly uneven retirement outcomes across different regions.

Regional Contributions Reveal Economic Differences

The report also highlighted that South Islanders are leading in terms of contributions to their KiwiSaver accounts. In regions such as Marlborough, Otago, Southland, and Canterbury, approximately 70 percent of members are actively contributing. In contrast, only 60 percent of members in Auckland and Northland are making regular contributions. Mackenzie pointed out that regions with higher participation rates often coincide with higher proportions of individuals receiving full or partial government contributions, which are available to those who contribute at least $1,042 per year.

Conversely, the levels of government contribution in Gisborne and Northland are notably low. Mackenzie attributed this to the high levels of deprivation in these areas, suggesting that economic conditions and financial literacy are crucial factors influencing participation in the KiwiSaver scheme. “Understanding these variations is crucial,” she noted, as it enables policymakers and providers to create targeted strategies to enhance participation in regions that lag behind.

Nationwide, approximately 40 percent of KiwiSaver members are not regularly contributing. Among younger individuals aged 16 and 17, only 27 percent were found to be contributing, despite the data being collected prior to the introduction of matching employer or government contributions for this age group.

Mackenzie highlighted that contribution rates have remained stable despite recent economic challenges. “I think that’s incredibly positive,” she commented, emphasizing that the percentage of customers actively contributing has not significantly changed.

As the conversation around KiwiSaver continues, it is clear that addressing these regional disparities is essential for fostering financial security for all New Zealanders. With targeted efforts, there is potential to improve participation and enhance long-term retirement outcomes across the country.