Fraser Whineray Proposes KiwiSaver Reforms for Future Generations

Fraser Whineray, the former chief executive of Mercury, has unveiled a comprehensive plan aimed at reforming New Zealand’s nearly two-decade-old compulsory savings scheme, KiwiSaver. A key focus of his proposal is to establish a fixed withdrawal age for KiwiSaver funds, independent of the eligibility age for the New Zealand Superannuation scheme, currently set at 65 years.

Under the current structure, KiwiSaver funds can be accessed when individuals reach the age of eligibility for NZ Super, which has shifted from 60 to 65 since its last adjustment in 1993. Whineray argues that the access age for KiwiSaver should remain at 65, regardless of any potential changes to NZ Super. He emphasized, “If that [NZ Super age] shifts, then KiwiSaver shifts. I’m going ‘well hang on a second, KiwiSaver is my money’.” This statement reflects his belief that New Zealanders should be able to plan their finances with certainty regarding their KiwiSaver access.

As part of his initiative, Whineray plans to distribute a summary of his proposed policy to all political parties on Monday. He expressed his desire to see a clear commitment from these parties, stating, “I would love to see them answer the question: ‘Are you going to confirm that people can get their KiwiSaver no later than 65?’” He asserted that if political leaders provide vague responses or delay action, it would be reasonable for New Zealanders to question their commitment to the issue.

In addition to addressing withdrawal age, Whineray emphasized the need for KiwiSaver funds to operate independently of government influence. He stated, “KiwiSaver funds need to know that it’s up to them and their risk appetite and their fund managers to work out what they should be invested in.” This perspective underscores the importance of allowing KiwiSaver participants and their chosen fund managers to make investment decisions without governmental pressure to address fiscal challenges.

Whineray’s reform plan also seeks to increase KiwiSaver support for children. Notably, the number of individuals under 18 with KiwiSaver accounts has declined since the removal of the $1,000 “kickstart” payment. He proposes a system where children could automatically have an account opened by Inland Revenue at birth, funded with $5,000 from the government. Families could then contribute $2 per week, potentially accumulating a balance of $20,000 to $25,000 by age 18. Whineray believes this could be financed by reallocating the $500 million per year currently spent on unevenly distributed incentives for individuals aged 18 to 64.

The member tax credit, which previously cost nearly $1 billion, has recently been halved to $260. Whineray pointed out that many individuals are currently missing out on benefits, leading to a growing divide between those who can access support and those who cannot.

Additionally, he advocates for maintaining compulsory employer contributions for employees on parental leave, with a target contribution rate of 12%. He suggests a gradual adjustment whereby employer contributions would decrease to 2% in 2027 and then increase by 0.5% annually until 2047, while employee contributions would remain voluntary. Whineray acknowledged the need for a cautious approach, stating, “We have to do this very gently… we’ve left people behind.”

Finally, Whineray proposes restrictions on accessing KiwiSaver funds for individuals who have been outside the country for a year. Currently, KiwiSaver participants can withdraw their funds after a year abroad, but he argues that this policy should be revised to prevent premature withdrawals, particularly for those who may be living overseas temporarily.

Whineray’s proposals reflect a commitment to ensuring that KiwiSaver remains a viable and reliable savings option for New Zealanders, while addressing disparities and promoting long-term financial security for future generations.