We’ve crunched the numbers - and KiwiSaver contributions should be closer to 14%

Sunday, 5 April 2026

The intent of Fraser Whineray’s KiwiSaver 2.0 is right - higher contributions, for longer, so more people retire with dignity. But some of the proposal is complicated, and complexity breeds disengagement, says AMP’s Jeff Ruscoe.

Jeff Ruscoe is AMP’s managing director.

OPINION: Fraser Whineray’s KiwiSaver 2.0 proposal has put retirement adequacy back in the spotlight. On the big question - whether today’s KiwiSaver settings are enough for many people to retire with confidence or not - it’s hard to disagree.

Whineray says many Kiwis are “missing the KiwiSaver bus” and he’s right. But for many the bus isn’t just being missed - the way it was built means some may never reach a meaningful destination in the first place. When default settings are too low, the people who need KiwiSaver to work hardest are the same people most likely to arrive short.

The numbers tell the story. The average KiwiSaver balance at retirement is around $69,000. That just doesn’t stretch across what could be 20 to 30 years of retirement. To support a modest “choices” lifestyle, estimates suggest New Zealanders need closer to $273,000 – and that’s assuming that NZ Super settings stay in place. When these figures don’t line up, it’s not just a spreadsheet problem; it shows up in the everyday choices older Kiwis are forced to make. We’re seeing that now with retirees cutting back on heating, rationing food, and struggling to maintain a basic standard of living.

At AMP, we’ve crunched the numbers on what is needed to close the gap for future generations, and this has led us to support a clear, long-term pathway to a combined contribution rate of even more than Whineray proposed – we believe it should be 14%. Not overnight, and not without thinking carefully about affordability, but with a deliberate plan to lift settings over time. We don’t see a need to drop the system back to 2% to start to lift it back up, as KiwiSaver 2.0 suggests.

Of course, big policy reform can be slow. And if we’re being honest, we’ve been talking about KiwiSaver not being “enough” for a long time. That’s why I have some sympathy with the intent behind KiwiSaver 2.0 - higher contributions, for longer, so more people retire with dignity. But some of the proposal is complicated, and complexity breeds disengagement, which is when people start to miss out - whether that’s staying in the wrong fund, contributing too little for too long, or withdrawing without a plan.

That doesn’t mean we should lower our ambition. It just means we should prioritise reforms that are simpler, more durable, and easier for people to understand.

AMP general manager Jeff Ruscoe agrees with Fraser Whineray’s KiwiSaver 2.0 plan - although he’d like to see it go even further.

One of the areas I’m in agreement with Whineray is on the call for a proper “decumulation” (drawing down on savings) framework; practical support for how people turn a nest egg into income, manage risk, and make savings last.

It’s common for people to withdraw KiwiSaver at retirement and shift it into cash because it feels “safe”. But over time, cash fails to keep pace with inflation, which means the real spending power of our retirees is shrinking. But rather than moving towards an overly prescribed decumulation process (NZ Super in another guise), we need to allow Kiwis to keep their autonomy, maintaining flexibility that still feels simple: tailoring decisions to their own circumstances, health, goals and family situation. We see and respond to this need regularly – underpinning our advice that investing shouldn’t end at 65. With a 20-30 year runway through retirement, Kiwis need better planning for how to manage and optimize their nest egg whilst they’re IN retirement, not just in the lead up.

Where Whineray and I start to diverge in our views is allowing Kiwis access to their retirement pot before 65. Early access harms their longer-term prospects – Kiwis need to plan to spend 20 or 30 years in retirement, meaning their money needs to last the distance. Taking it out early, for any reason (other than the existing first home and hardship withdrawals allowances), negates this foundational principle.

Acknowledging that any kind of fundamental change will realistically take years to be enacted makes it even more crucial that the private and public sector support the financial empowerment of Kiwis – allowing them to make informed choices that allow them to improve their outcomes today, without waiting for change to be enacted. These choices include things like increasing voluntary contributions, investing outside of KiwiSaver, knowing what the projections look like, and seeking proper financial advice.

New Zealand doesn’t have to choose between “nothing changes” and “everything changes tomorrow”. We can do two things at once: lift the settings that shape outcomes for everyone, and help individuals take small, doable steps that add up over time. That’s how confidence is built - not through alarm, but through clarity and momentum.