NEW ZEALAND - The government's KiwiSaver superannuation scheme has brought additional complexity and new fiscal risks, because of the high cost of generous incentives, according to a report from the Retirement Commissioner.
It said KiwiSsaver's generous incentives would compound the gap in retirement income between those who have saved and those who had not, threatening the equity and fairness of current retirement income policy.
It also highlighted the fact that fee levels and asset mixes in KiwiSaver funds were different, which meant savers risked lower retirement funds purely as a result of the random assignment process.
Diana Crossan, retirement commissioner, said: "The complexity means New Zealanders must learn more about financial matters, and will have an increased need for information about things like the fees charged by KiwiSaver providers, so people can deal with the financial opportunities available to them."
Crossan's report also made a number of recommendations relating to KiwiSaver. It said the Ministry of Economic Development should report by mid-2008 on whether KiwiSaver default funds should have the same level of fees, on the prescription of asset mix.
It said the Ministry should also reporton any other changes to default fund legislation in order for passive KiwiSaver members to stand a fair chance of even outcomes.
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