I disagree with the currently fashionable call for compulsory superannuation.

It’s argued that because Australia has compulsory super, so should we.  This argument brushes over a fundamental difference between the two countries.  In Australia, public funded superannuation comes in the form of a low-level, income tested, asset tested pension.  Compulsory super in Australia is designed to replace the public pension.

New Zealand has spent 35 years arguing over National Super ever since Roger Douglas first proposed compulsory super.  In the last few years, the major political parties have reached a consensus supporting National Superannuation, linked to inflation and wage growth, and guaranteed by pre-funding through the New Zealand Superannuation Fund.  I believe these arrangements have wide public support and National will not be changing National Super or the new fund.  It’s a simple system everyone understands.

So I can’t see where compulsory super fits in.  We have a national superannuation, a new and fast growing government savings fund and KiwiSaver coming in on 1st July this year.  KiwiSaver will offer incentives to people who can save to do so.  Many Kiwis won’t sign up despite the incentives because they can’t spare any more cash from their weekly budget.  On top of these three schemes, people continue with their main form of saving by paying off their mortgages.

National will stick with National Superannuation with no changes.  Compulsory superannuation isn’t required and doesn’t fit in the New Zealand system.