Many thanks to Rebecca Fraser, manager of a community organisation that works with single parents, for this post.
The Budget released this week described
an almost immediate end to the Kiwisaver $1000 kick-start incentive. We know that inequality is growing within our current system and unless
we start to look at things very differently, it will continue to grow. However, even within the system, sometimes
there are mechanisms that work against unfairness. The Kiwisaver $1000 kick-start incentive was
one of these. Income based retirement
schemes like Kiwisaver tend to perpetuate inequality, because they
don’t level out the playing field for people. The disappearance of the
kick-start incentive makes the system worse.
is disadvantaged by the disappearance of the $1000 kick-start? They
don't collect ethnicity stats about Kiwisaver take-up so we don't have any data
about which ethnicities are enjoying the extra $1000. My reflection of this is
based purely on what people I know have told me, when I asked them. Almost
always I have heard from working Pākehā that they are enrolled in Kiwisaver and from
working Māori that they are not, and I have
noticed this trend amongst people I have employed. It might be different in
different workplaces and sectors - I hope.
why would you save for a retirement when you're more likely to die before you
get there? Māori are expected to live 7.3 years less than non-Māori. The gap is reducing, but not quickly. Having
money in one's retirement inevitably prolongs life where lack of money shortens
it but due to lifetime employment and income patterns, women are more likely to live in poverty
in retirement than men, and Māori more than
European. People who might not make it to retirement are not naturally
incentivised to join a retirement savings scheme.
who do not expect to own their own home are not naturally incentivised to join
a scheme that can help them with the deposit on their first home. With Māori home ownership rates at 28.2% vs.
European at 56.8%, people’s expectations that Kiwisaver would prove useful
might understandably be different.
people who are struggling to make ends meet right now are not naturally
incentivised to join a retirement savings scheme. Fair enough too, a bun in the
hand is worth more than a loaf in the trees, as it were. According to the
indicators about inequality for Māori
and Pacific people put forward by the Victoria Business School,
Māori end up with $96 a week less than
European, on average. And this is only
one small measurement of the current inequalities of our system.
All the little inequalities add up. The tricky little fact that children who are
not earning any money could sign up to Kiwisaver and gain the $1000 incentive was,
in my experience, a piece of information shared across monied connections. A
mortgage consultant looked at my daughter when I brought her into the bank and
handed me a sheaf of forms that required signatures and proof of ID from both
parents to sign her up for Kiwisaver. But people who don't have regular discussions
with bank managers, people whose negotiation with the other parent of their
child can barely cope with whose turn it is to drop them at school, let alone
which Kiwisaver scheme to opt the kid into, people whose daily existence is in
the 'Let’s get through it' mode rather than 'Let’s think about what happens when
you're 70' mode - these people could all have done with the $1000 kick-start
that isn’t available any more.
who might not have natural incentives to join a retirement savings scheme is anyone
for whom life is not an orderly procession from school to university to a job
to marriage... home ownership, a couple of kids, a regular holiday in Fiji, the
eventual divorce, the delighted remarriage, honeymoon in Europe and a peaceful
People who, in other words, distrust that the system will work for
them, with good reason.
they *are* perfectly good reasons not to take up Kiwisaver. But 'perfectly good
reasons why not' are EXACTLY why incentives need to be in place. Incentives
like the $1000 kick-start. I am gutted for us. I watched John Key on TV last night dismiss concerns
by saying something to the effect of 'Well,
it has been around for ages and they've had the chance, so if they haven't done
it by now then they were never going to.' He is wrong. Incentives are not in place for the people
who can get over the finish line first, but to encourage the people who feel
like they’re not even in the race to begin with.
I bet his retirement still feels pretty cosy.