KEY POINTS:
KiwiSaver has increased the household savings of New Zealanders but the cost of the tax incentives and administration may mean New Zealand as a whole is making a national savings loss, warn economists.
Speaking at the Retirement Policy Symposium, New Zealand Institute of Economic Research economist Trinh Le said much of the money going into KiwiSaver was being reshuffled from other forms of saving, and with the high cost of the taxpayer-funded incentives KiwiSaver was likely to have a neutral or negative effect on our savings level as a nation.
Around $600 million has already gone into KiwiSaver accounts. Just over half of this has come from Government coffers, while about 40 per cent is from individual savers and 9 per cent is from employers.
But research undertaken by Le and Waikato University economics professor John Gibson at the end of 2007 suggests only 19 per cent of the total may actually be new savings.
Le said the 19 per cent assessment was at the higher end of what the pair believed was new savings as some of the money people were putting into KiwiSaver should be used to pay off debts like mortgages.
They estimated the lower end to be around 9 per cent - which Le said was not enough to cover the administration and compliance costs of KiwiSaver, let alone the Government's contribution.
The pair gathered the information from a survey of 600 individuals.
Le also said it was questionable whether New Zealand had a savings crisis before KiwiSaver was launched.
She said macroeconomic data did not produce conclusive answers.
But Finance Minister Michael Cullen said it was a "heroic" view to say New Zealand did not have a savings problem.
"While there is disagreement on what indicators we should use when quantifying our problem, I have no real doubt that the problem is real and very significant.
"By one measure, our national savings rate ranks 108 out of 130 nations while evidence from Statistics New Zealand is clear that we spend more than we earn."
