retirement.org.nz

The Retirement Commission helps New Zealanders prepare financially for retirement, through education, information and promotion. Our work contributes towards three key elements vital to New Zealand’s retirement income framework:

• Maintaining stable effective government policy.
• Developing a more trusted financial services sector.
• Creating a financially educated population.

These three elements need to be in place so that all New Zealanders have the confidence and ability to make informed and lasting decisions about their finances throughout their lives.

New Zealanders’ standards of living in retirement will depend largely on what assets and income they have during their retirement years.  Their income is likely to come, as it has for many years, from three major sources: government, private savings and investments, and workplace superannuation.

Through its goal of economic transformation, the Government aims to develop a high-income, knowledge-based economy that will lift living standards over time. Therefore New Zealanders’ expectations of retirement income are also likely to increase.

A fundamental assumption for any retirement planning or decision making is that the government will continue to supply a basic income to older people. For some years there has been broad political consensus supporting this approach. If individuals want to receive more than this basic retirement income, then they must take action themselves.

New Zealanders are faced with issues of funding education, home ownership, investing in businesses, debt management, and family financial obligations. They need to fit financial preparation for retirement into this framework.

Simply saving some money for retirement may not be possible nor indeed the best financial choice for some individuals and families at certain stages of life. The traditional message that “you must save for your retirement” is now of less practical use to people functioning in an advanced modern economy and a changing society.  Financial decisions involve increasingly complex and subtle considerations about the sources and uses of personal funds throughout life.

In the 2007 Budget, the Government announced additional incentives through the KiwiSaver scheme to encourage New Zealanders to save for their retirement. 

It is important, however, that when people make their financial decisions – such as opting in or out of KiwiSaver – they are aware of all their options, and the issues and implications involved.

The Commission takes a lifetime view to educating and informing the public about managing personal finances. Financial attitudes and behaviours start early in life, as do opportunities to build the basic skills of literacy and numeracy needed to make sound financial decisions.  So, for example, we are helping to integrate personal financial literacy education programmes into the school curriculum. We are also in the early stages of working with providers and industry training organisations, to investigate the possibility of financial education becoming a core part of many tertiary qualifications.

This year the Commission will conduct its first three-yearly review of retirement income policies.

The 2007 review will provide a contextual overview of current policy settings and outcomes, followed by more in-depth analysis and recommendations on specific topics.  The review will focus on:

• Options to enhance employment opportunities for mature and older people who would like to work.
• The issues and policy options available to enable older New Zealanders to convert assets to income (technically referred to as decumulation).
• An independent assessment of the effectiveness of financial education available to and used by New Zealanders. 

The Retirement Commission has a monitoring role in protecting the interests of residents of retirement villages, under the Retirement Villages Act 2003:

• Our educative role assists people to make informed choices and understand their rights.
• We monitor the effects of the legislation and advise government on issues, codes of practice and policy.
• We engage with the industry, the wider sector and the media.
• We have a specific statutory function to approve disputes panel members.