Wednesday, June 24, 2015

A blind bit of difference

[T]he removal of the $1,000 kick-start contribution will not make a blind bit of difference to the number of people who join KiwiSaver

That's what John Key said when questioned about his decision to can the kickstart payment in this year's Budget. But it turns out he was wrong: KiwiSaver enrolments have dropped 50% in the last month:

But ANZ, which has a 26 per cent share of the KiwiSaver market, said that in the month since the measure had been announced, enrolments had dropped by "more than 50 per cent".

The bank declined to give further details. However, IRD figures have showed that the net increase in people in the KiwiSaver scheme nationwide was running at about 15,000 a month, meaning the change could have put off thousands of people.

ANZ Wealth managing director John Body said the removal of kick-start had hit confidence in the retirement savings scheme.

Which makes sense: the kickstart payment was the big incentive to join KiwiSaver, and without it it is far less attractive. And ignoring that was just stupidity.

Budget advice is due to be proactively released next month, so it will be interesting to see if Key and English knew and ignored it, or if Treasury ignored reality because they wanted to make cuts.