KiwiSaver members are missing out on the full government tax credit, with major providers reporting that around half of their members have not contributed enough. This is a concerning trend, especially given the reduced government contribution rate from $521 to $260. The issue is particularly prominent among 16- and 17-year-olds, with 96% of Westpac members in this age group on track to miss out. Women are also less likely to have contributed enough, with a gender gap becoming more prominent in the 18- to 24-year-old cohort. The overall figure is alarming, with a large proportion of people not contributing enough, including those who are not working or have been made redundant. This highlights the challenges of encouraging savings in a cost-of-living crisis. The Financial Markets Authority's report shows that 1.265 million people are members but not contributing, and not on a savings suspension. This suggests that KiwiSaver is not a priority for many New Zealanders, with some self-employed people deciding it is no longer worth it. However, there are some positive signs, with 86% of members at Kernel actively contributing and 61% at Generate already contributing enough. The reduced government contribution may also be a factor, with some members perceiving the incentive as less compelling than in previous years. This raises a deeper question about the effectiveness of the government's incentives and the need for better engagement with members throughout the year. In my opinion, the key to improving retirement outcomes is to make it easier for people to contribute, whether through voluntary payments or other means. This could include providing more information and support to members, as well as exploring new ways to encourage savings. Overall, the issue of KiwiSaver members missing out on the full government tax credit is a complex one, with a range of factors contributing to the problem. It will require a multi-faceted approach to address the issue and ensure that New Zealanders are in a better place in retirement.
