We have the chance right now to make a real difference to the quality of life our newest employees will enjoy when they retire.

The Retirement Commissioners review of retirement income policy happens only once every three years and is currently underway.

We now have the opportunity to ask what has changed since 2010 and how can we do better.

For a start, we no longer believe that NZ Superannuation alone is enough for us to retire on. NZ Super currently provides a maximum of $349 per week for an individual and $537 per week for a couple.

The Financial Services Council (FSC) recently released the results of a Horizon Research survey showing only 9 per cent of New Zealanders believe that NZ Super alone will be sufficient for them to live on when they reach the age of entitlement.

In an earlier Horizon Research survey most New Zealanders defined comfortable as a weekly living amount that is about twice that of the NZ Super entitlement, or about $300 more per week for an individual and $500 more per week for a couple.

Many of the 2 million people who have joined KiwiSaver may mistakenly believe that at a 2 per cent contribution by employee and employer (rising to 3 per cent from 1 April) will cover the shortfall between NZ Super and a comfortable retirement. But we know that this is simply not the case.

Our calculations show that people need to save 10 per cent of their income from the time they start working, at 25 years for example, to achieve a comfortable retirement. That percentage increases rapidly as people delay starting to save for their retirement.

If we start saving after 50, we need to save half our income to fund such a comfortable retirement. Only about one in every 10 KiwiSaver members are currently saving at a rate sufficient to fund a comfortable retirement.

Even if we all save at the rate of 10 per cent of income, we will continue to fall behind the rate of saving in Australia, and thats before Australians increase their rate of compulsory retirement saving from 9 per cent to 12 per cent as they have agreed to do.

Read the rest here:
Retirement Income Policy Review - why it matters