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People with a lot of debt - those who have traditionally been told to avoid most super schemes - should still think seriously about joining the Government's KiwiSaver scheme, says at least one financial planner.
Lisa Dudson, a financial adviser at Acumen, said that doing what was "technically correct" might not be the best way to get ahead.
"From a technical perspective, paying off your mortgage before you invest is the best way forward, because you pay your mortgage at 8 per cent, which grosses up to 12 per cent," she said.
But Dudson said the important question to ask was this: would you really put the 4 per cent of your salary that would go into KiwiSaver on the mortgage? "For a lot of people, the chances of them putting that into a savings plan is much higher than them actually putting it on the mortgage."
However, Dudson also advised "pulling finger" and paying off other debt.
Many people bought their lunch, had "three lattes a day" and takeaways five nights a week. By making small sacrifices, they could make a 4 per cent KiwiSaver contribution and still pay off debts.
But Vai Harris, manager of the Pacific Island Budgeting Service in Mangere, said she saw people coping with bigger problems than trying to cut down on latte consumption - such as mortgagee sales and eviction from their homes.
She advised many of her clients to pay off debts first, before thinking of putting money aside in savings. "A lot of people coming in there are really over-committed. My advice is to pay debts first."
Problems caused by a bad credit rating could last more than five years, she said, making it impossible to get a loan later in life.
Economist Gareth Morgan, who has been critical of the way traditional investment fund managers operate, said that with the addition of tax credits and employer contributions, KiwiSaver was now "pretty attractive" for those people willing and able to forgo 4 per cent of their gross income a year "and have little or no personal debt".
However, this meant it probably favoured the higher-paid. "Many low income people will not be in a position to forgo any of their income and therefore will miss out on the benefits."
Morgan pointed out the wisdom of looking at paying off the mortgage first. "If you have a mortgage or other personal debt, paying it back is the surest return you will get on any additional savings you are able to make.
"It may not be the best return (although it's pretty good given the current high interest rates) but it is 100 per cent certain."
Retirement Commissioner Diana Crossan said that though workplace savings schemes had been proven to be the easier way of saving, they needed to be "as simple as possible".
"Many people have a large mental hurdle which can stop them signing up to long-term savings. The kickstart cash incentive and automatic opt-in to KiwiSaver may help people over that hurdle."
Should you join KiwiSaver?
Q. If you are 60 or over, is it still worth opting in to KiwiSaver?
It isn't - only if you are 64 and 11 months, budget adviser Raewyn Fox says. At the very least, you would get the introductory $1000 plus the tax credits of $20 a week from the Government. "I'm approaching that age, and I'd like to be in," she says. However, people should realise they can't get their hands on the money for five years after opting in. Even if they opt in at 61, they would not get it until 66.
Q. What if I'm self employed? Is it worthwhile incorporating as a company so you receive both the member tax credit as an employee and the employer's tax credit?
No, says Ian Rowe, PriceWaterhouseCoopers' director in taxation services. Incorporating would then require going on PAYE. As a self-employed person, you can claim all kinds of expenses; if you become a company, it takes you to another level of taxation. It's too much hard work for very little gain, Rowe advises.
