KEY POINTS:
The Government's KiwiSaver initiative may well prove to be the fifth Labour administration's greatest legacy to New Zealand.
It is certainly too important to the future of every working New Zealander, and to the future economy of this nation, for it to become a political football to be kicked in all directions, by changing administrations or by political adversaries seeking to score points.
As a country we have done that for too long around retirement savings. The time has come for all of us to get behind KiwiSaver, make it work, and build on the benefits it offers to New Zealanders.
The magic ingredient KiwiSaver offers, which has been missing in this country for years, is portability. To be able to change employers without unsettling your KiwiSaver scheme arrangements is an administrative hurdle New Zealand workers will no longer have to face.
I am of the view the state should have the courage to move quickly to make KiwiSaver compulsory and, with a bit of luck, even add tax breaks. A range of sound annuity options for those receiving lump sum payments on retirement is also required.
If that sounds like heresy from an orthodox banker, then my riposte is that the personal well-being of thousands of New Zealanders is more important than the purity of economic theories.
While KiwiSaver is a great start, without compulsion and without tax breaks the people who most need retirement savings will be the ones least likely to participate.
My conviction is that saving to provide for retirement years ranks as the second most important financial decision the average person will make in their life, the first being the purchase of a home.
While New Zealanders have bought into the home ownership argument in great numbers, regrettably the reverse applies when it comes to retirement savings. Too many still cling to the belief that the state should, and will provide.
Where I believe this is a personal tragedy is that it means far too many couples will be living out the remaining years of their lives on the state's pension of today's equivalent of $486 a week before tax (or $320 a week for those who are single).
Yes, a person can live on that level of income, but imagine the better lifestyle to aspire to if you had built your retirement nest egg over your working life.
If a person on the average wage of $844 a week before tax put just 4 per cent of that income into retirement savings in today's dollars for 10 years, based on the Retirement Commission's calculations, he or she would receive about $21,000 in today's dollars on retirement. That money could be used to either buy an annuity, or boost spending power.
When I joined the ASB some 40 years ago as a trainee bank officer, I only signed on to the retirement savings scheme because it was compulsory.
The choice then was join the scheme, or find another employer.
As I contemplate my future, and see how my retirement savings have built up over the years because I was forced to save from the day I started work, I am now grateful that as a young man I did not have choice, and by the time I did I was wise enough to continue saving.
ASB are now the only bank chosen as a default provider for KiwiSaver.
I have no doubt that in a decade's time many people will look back on the introduction of KiwiSaver and reflect on the fact that joining the scheme was one of the smartest financial decisions they ever made.
* Hugh Burrett is the Managing Director of ASB, the country's fourth largest bank.
