12 Oct 2011

KiwiSaver contributions must rise - Tower CEO

10:00 am on 12 October 2011

The head of Tower Investments is calling for KiwiSaver contributions to more than triple over the next decade, as the country grapples with high foreign debt and low savings.

Tower Investments operates funds in the superannuation scheme and its chief executive Sam Stubbs says the debate over whether KiwiSaver should be compulsory is now over, with hints from the parties that there will be some form of compulsion and polls showing a net majority of voters saying they believe a compulsory scheme is a good idea.

Mr Stubbs suggests that the next stage is addressing KiwiSaver contributions, which he says are so low they will barely support people's retirement.

He says most contributions are currently at 4%: in his view they should be increased by up to 1% a year over the next decade, to bring the scheme into line with Australia, where the rate is 9%.

Mr Stubbs says the rises need to take place over a long period of time because New Zealanders can't afford higher contributions at this stage, but also because saving is a habit and habits are best formed over a long period of time.