Behavioural economics and retirement savings

improving Kiwisaver


  • William Townsend



KiwiSaver, Behavioural economics, retirement savings, defaults, behavioural biases


More than a decade after the inception of the KiwiSaver scheme, 431,779 members remain in the default conservative fund into which they were automatically enrolled. These default members are in funds not consciously chosen and which may not be the most financially appropriate for them. A number of common human behavioural biases have likely contributed to why so many default members remain in the default funds. Although the fees charged by default funds are among the lowest in the market, such funds offer substantially lower returns than more growth-oriented funds. These lower returns are likely to lead to a significant shortfall in retirement savings and retirement standards of living for default members. This article summarises the main findings of a research project into these issues and presents policy options and recommendations.


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