PPI: KiwiSaver vs Personal Accounts
NEW ZEALAND/UK - KiwiSaver and Personal Accounts should not be taken as like-to-like schemes when drawing comparisons of success, according to the Pensions Policy Institute (PPI).
The PPI said, while there were obvious similarities, the two schemes had different risks to take into account, such as existing contribution levels and scheme conversion options.
Niki Cleal, director of the PPI, said at a seminar today: "If one third of people auto-enrolled into UK pensions were to opt out in 2012, as seen in New Zealand, that would equate to around 7 million new work-based pension savers.
"However, some of the key risks associated with introducing auto-enrolment into pensions saving in the UK do not apply to the same extent in New Zealand: such as the interaction with means-tested benefits and the risk of employers levelling-down existing Pensions."
Attendees at the seminar included Cathy Magiannis, programme director of KiwiSaver, from the New Zealand Inland Revenue, and Alison O'Connell, former PPI Director and independent researcher advising New Zealand's Retirement Commission.
A key concern in the UK has been that Personal Accounts would compete with existing retirement provision. Since the KiwiSaver was introduced a year ago, there has been little evidence of this happening in New Zealand.
The PPI said this was probably due to a caveat in the KiwiSaver system which would allow existing employer-run schemes to be converted to a compliant plan. The UK, so far, has not passed legislation to permit such a change.
Other differences in employer contribution rates and the UK means-testing benefit allowances, meant spectators should be careful when evaluating the two systems, the PPI concluded.
Niki Cleal, director of the PPI, said at a seminar today: "If one third of people auto-enrolled into UK pensions were to opt out in 2012, as seen in New Zealand, that would equate to around 7 million new work-based pension savers.
"However, some of the key risks associated with introducing auto-enrolment into pensions saving in the UK do not apply to the same extent in New Zealand: such as the interaction with means-tested benefits and the risk of employers levelling-down existing Pensions."
Attendees at the seminar included Cathy Magiannis, programme director of KiwiSaver, from the New Zealand Inland Revenue, and Alison O'Connell, former PPI Director and independent researcher advising New Zealand's Retirement Commission.
A key concern in the UK has been that Personal Accounts would compete with existing retirement provision. Since the KiwiSaver was introduced a year ago, there has been little evidence of this happening in New Zealand.
The PPI said this was probably due to a caveat in the KiwiSaver system which would allow existing employer-run schemes to be converted to a compliant plan. The UK, so far, has not passed legislation to permit such a change.
Other differences in employer contribution rates and the UK means-testing benefit allowances, meant spectators should be careful when evaluating the two systems, the PPI concluded.
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