Wellington September Seminar

Topic: The case against compulsory saving in New Zealand
Speaker:  Michael Littlewood, Retirement Policy and Research Centre, University of Auckland
Date:  Monday 20 September 2010
Venue: Simpson Grierson, Level 24 HSBC Tower, 195 Lambton Quay, Wellington

Topic: New Zealanders aren’t saving enough for retirement; have too much debt, too much in housing, especially residential rental properties, and not enough in superannuation savings. In the face of an ageing population, we have to do something about all this. KiwiSaver was unexpectedly popular so is it time to 'switch off' the right to opt-out when changing jobs? Over time, that would make everyone save for retirement in managed funds and help New Zealand prepare for the growing number of retirees (and improve capital markets). We can emulate Australia’s success in making citizens save more and, incidentally, help make them more financially aware. But first, a working group will prepare the political ground.

Almost everything about this scenario is wrong, to the best of our present understanding of the evidence. Theory may also be inconvenient. For example, if everyone had to join a retirement savings scheme, some would lose their jobs. But if we actually knew what was happening, we could all worry less.

The Speaker: Michael Littlewood retired in 2008 after a career in the financial services industry. Most of that was spent advising employers in the UK, New Zealand and in other countries what to do about superannuation schemes for employees. In that capacity, he was the Employee Benefits Director at Fletcher Challenge Limited for nine years. He then helped establish SuperLife, a superannuation master trust and KiwiSaver provider. Michael is now Co-director of the Retirement Policy and Research Centre (www.RPRC.auckland.ac.nz) and also the principal editor of www.PensionReforms.com, a web site that aims to improve the quality of the international debate on pension reforms.

In 1998, Michael published How to create a competitive market in pensions: the international lessons (Institute of Economic Affairs, London) and has been a frequent contributor to debates in New Zealand on pension policies. He had a damascene experience as a member of the 1992 Task Force on Private Provision for Retirement (the first ‘Todd Task Force’). Michael’s presentation will try to explain why he was converted from being a strong advocate of ‘privatising’ what is now New Zealand Superannuation into someone who thinks we need to understand what governments can and can’t do; should and shouldn’t do. Making citizens save more is probably a forlorn task, even if it were a good idea (which it may not be).

There will be an opportunity for questions and discussion following the presentation.