Policy Quarterly

Understanding Retirement Income in New Zealand: insights from microdata and modelling

2025-08-24T23:14:56+00:00

This article brings together recent work from the New Zealand Treasury using microdata and microsimulation modelling to examine retirement incomes through four key lenses: intergenerational dynamics, income diversity, retirement transitions and work incentives. It highlights how demographic, behavioural and economic changes are reshaping retirement realities in New Zealand, and explores how policy design interacts with people’s lived experiences as they age.

Aotearoa New Zealand in 2050: preparing our retirement income policy for the future

2025-08-24T23:28:48+00:00

New Zealand is expected to undergo significant demographic changes over the next 25 years, raising concerns about the sustainability of its retirement income system. As the population ages, the share of people over 65 will increase, driving up the costs of New Zealand Superannuation (NZ Super). Spending on healthcare and other public services will also grow, while a smaller share of workers will be available to fund these costs. Under current policy settings, these trends will result in rising taxes, reduced public services or growing debt.

This article explores what Aotearoa New Zealand may look like in 2050 and considers how retirement income policy may need to adapt. It argues that the current pay-as-you-go system is vulnerable to demographic change and that shifting to a more savings-based system – such as by strengthening KiwiSaver or raising contributions to the New Zealand Superannuation Fund – would make it more sustainable. The article is based on a recent report by the New Zealand Institute of Economic Research (NZIER), commissioned by the Te Ara Ahunga Ora Retirement Commission for the 2025 review of retirement income policies (NZIER, 2025).

Making Good Choices for the Long Run: the economic benefits of KiwiSaver in 2100

2025-08-24T23:36:49+00:00

As New Zealand faces the challenges of an ageing population and widening inequality, it is useful to ask: what is the long-run economic role of KiwiSaver, is it an inclusive institution, and how can it be strengthened for future generations? This article explores the economic benefits of KiwiSaver beyond individual retirement outcomes in the future. It examines whether KiwiSaver contributes to national savings, reduces long-term fiscal pressures, and supports intergenerational inequality by promoting early asset-building.

Considering case studies from Singapore, Australia and the Netherlands, the article highlights how starting earlier, contributing more and investing better can build economic resilience, increase capital accumulation, and reduce social polarisation by supporting intergenerational equity. The findings of this research and focus on the need for long-term stewardship allows us to think deeply about how today’s contributions to KiwiSaver can shape a better future for the younger generations in the year 2100.

An Overview of the Pensions Policy Agenda in the United Kingdom

2025-08-25T00:32:25+00:00

The UK pensions system has been under political scrutiny since the change of government in mid-July 2024 and the initiation of a two-part pensions review. The first part of the review focused on growth, particularly UK investment, and changes have been proposed in a Pension Schemes Bill submitted to Parliament in June 2025. Part two of the pensions review will focus on adequacy and commenced in July 2025. This article outlines some of the features of the UK pensions system and provides a comparison with similar elements of the pensions landscape in Aotearoa New Zealand. It finds differences as well as similarities in the state pension and occupational pension and KiwiSaver policy settings, along with policy-setting changes that have been proposed to increase retirement savings but remain unactioned. The article also outlines the pending changes arising from the government’s growth agenda in the UK, and considers the similarities and differences with investment approaches in Aotearoa New Zealand.

KiwiSaver: maturing well?

2025-08-25T00:37:47+00:00

KiwiSaver was the world’s first national auto-enrolment savings scheme. It quickly became the prime vehicle for retirement saving in New Zealand. Questions over the level of participation, the number of members not contributing, and access to funds before retirement have largely been answered. Concerns now focus on whether and how KiwiSaver can provide sufficient retirement income as a supplement to New Zealand Superannuation. A greater focus on target outcomes and post-retirement planning is now needed for KiwiSaver to reach full maturity. Above all, there should be a more coherent solution for people asking, ‘How much should I save?’

Distributional Impact of New Zealand Budget 2025 KiwiSaver Changes

2025-08-25T20:12:30+00:00

Changes to the KiwiSaver scheme were introduced as part of Budget 2025. The changes will see employee and employer contribution rates increase over time to 4% for employees and 4% for employers and should generally lead to higher KiwiSaver retirement savings for salary and wage earners. However, another change, the decrease in the government contribution, will mean that (absent behavioural changes) some KiwiSaver members will have lower retirement savings than would otherwise have been expected, including members who are self-employed. Low-income members will also tend to be affected more, as the government contribution makes up a greater portion of their eventual retirement savings. We estimate that, in total, the changes in the Budget could increase KiwiSaver retirement savings for around 80% of currently contributing KiwiSaver members and reduce KiwiSaver retirement savings for around 20% relative to what would have been expected without the changes. Improving the targeting of the remaining funds for the government contribution could potentially improve the retirement outcomes for this 20% of members, but further work is required to determine the best approach. A broader issue that remains unaddressed is determining the optimal government incentive for a scheme designed to encourage private retirement savings, within the context of the entire retirement income system, which includes both private savings and New Zealand Superannuation.

Women and Retirement Income: A life-course perspective on policy solutions

2025-08-25T20:31:39+00:00

Men’s KiwiSaver balances are on average 25% higher than women’s. Through a life-course approach, this article identifies six critical stages where policy interventions could improve women’s retirement income outcomes and reduce that gap: formal education and training, work, relationship status, parenting, housing tenure, and retirement. Drawing on data and evidence from New Zealand and overseas, the article argues that more coordinated interventions across these critical life stages could improve equity between women and men at retirement. The analysis reveals that while women and men start with similar incomes at age 15–19, the pay gap widens progressively through each life stage, creating cumulative disadvantage by retirement age.

Managed iwi investment schemes: an exploratory study on retirement

2025-08-25T20:45:32+00:00

Managed iwi investment schemes and iwi savings schemes represent targeted financial initiatives established to enhance the economic security, autonomy and collective wellbeing of iwi members. These schemes are designed to address the unique needs of whänau (iwi-affiliated families), emphasising the need to save for significant life events such as tertiary education, home ownership and retirement. Despite their growing relevance, there remains a paucity of research concerning these schemes. In response, Te Ara Ahunga Ora Retirement Commission commissioned Ihi Research to conduct an exploratory study aimed at understanding the current landscape of iwi savings schemes. This article presents two case studies: the Ngāi Tahu Whai Rawa managed iwi investment scheme and the Ka Uruora WhänauSaver savings scheme. Key learnings emerged from the data that can inform the establishment and strengthening of future schemes. Successful schemes are grounded in iwi aspirations and development strategies, supporting financial wellbeing, tino rangatiratanga (self-determination) and cultural connection. Holistic support, including financial education and kanohi-ki-tekanohi (face-to-face) engagement, is essential to building confidence and trust among whānau. Early enrolment of tamariki (children) and a focus on intergenerational impacts are vital for creating long-term change. Flexibility in scheme design increases participation, although balancing immediate financial needs, such as housing, with long-term retirement savings remains a key tension. Managing partnerships with financial providers requires active stewardship to ensure iwi values are upheld, and government support for financial education remains a critical enabler.

New Zealand Superannuation as a Basic Income

2025-08-25T21:07:17+00:00

Changing New Zealand Superannuation into a genuine basic income is a 21st-century idea that would allow a simple but effective clawback mechanism to operate through the tax system, generating useful revenue to help meet current and future government expenditure pressures in aged care, pensions, education, poverty reduction and climate change. In this article, various special tax schedules for superannuitants are modelled for 2025/26 for those who opt onto the basic income, called here the New Zealand Superannuation Grant. Significant savings are possible and could be further enhanced by alignment of the various rates of New Zealand Superannuation as set out in detail in St John (2025).