retirement.org.nz

The Retirement Commission helps New Zealanders prepare financially for retirement, through education, information and promotion.

Our work contributes to three key elements that are vital to New Zealand’s retirement income framework and to creating personal financial wellbeing for New Zealanders so they are adequately provided for in retirement:

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

These three elements need to be in place so that all New Zealanders have the confi dence and ability to make informed and lasting decisions about their fi nances 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.

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 fi nancial 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 living 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.

It is important 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 is funded to provide information that will help people make informed financial decisions throughout their lives. All our information is impartial and independent.

The Commission takes a lifetime approach 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. And in tertiary education we are working with a group of organisations to develop teaching resources and evaluation techniques for seven basic unit standards in personal financial education.

We also operate in the workplace and work with adults and older New Zealanders in the community. The Commission is best known to New Zealanders through the Sorted website and booklets. The website offers free impartial information, including 32 interactive calculators, to help Kiwis of all ages understand money matters and manage their personal fi nances throughout life.

We are working with financial service industry organisations to help them raise the bar on quality of product, service, information and advice. Our recent focus has been on improving the transparency of language about fi nancial products and the clarity of organisations’ communications with their customers. We will also be working to ensure the effectiveness of the Financial Advisers Act 2008. We expect fi nancial education will form an integral part of achieving effective disclosure.

In 2010 the Commission will conduct its second three-yearly review of retirement income policies. These statutory reviews, required under the New Zealand Superannuation and Retirement Income Act 2001, provide the opportunity to monitor the effectiveness and sustainability of the Government’s retirement income policies, thus helping to avoid sudden, major changes that those close to or in retirement would have little opportunity to respond to. The fi rst review, in 2007, provided a contextual overview of current policy settings and outcomes, followed by more in-depth analysis. It has helped widen understanding of current retirement policy and where it is heading.

The National Strategy for Financial Literacy has been acknowledged by a range of public and private sector players following its launch last year. We look forward to continuing to work with them to achieve our shared vision of personal fi nancial wellbeing for New Zealanders. In the coming year we hope to enhance the standing of the strategy’s advisory committee with the support of government and business.

The Retirement Commission has a role in protecting the interests of residents and intending residents of retirement villages by monitoring the Retirement Villages Act 2003. We are considering the results of our review of the role and function of statutory supervisors under the Act and starting the next review in our fi ve-year programme, of retirement village operators.