Fifteen elections, and then some. That is how many a young worker could live through before retiring, by Eric Crampton’s count. It sits at the centre of his objection to making KiwiSaver compulsory.
Crampton, chief economist at The New Zealand Initiative, does not oppose saving. His worry is what a locked-in pool of money invites. National has promised to make contributions compulsory from 2028 if it wins re-election, with employer and employee each at 6 percent by 2032. RNZ reported the wider package at over $1 billion across four years.
Why the exit matters
Today, Crampton writes in the NZ Herald, the option to leave gives savers some protection. If a government meddled with portfolios, a worker could decide not to join KiwiSaver, or stop contributing when next changing jobs, and invest elsewhere. Only money already inside the scheme would be exposed.
Compulsion removes that. “A pool of savings that people can neither leave nor stop feeding can be enormously tempting to Governments,” he says. In his telling, they stop seeing a retirement fund and start seeing cheap capital for pet projects.
He points to the pressure already building. Brad Tiller, who specialises in infrastructure finance, has called KiwiSaver the “missing link” in funding the country’s infrastructure. The Opportunities Party wants a compulsory “KiwiSaver 2.0” to build “a trillion-dollar capital pool.” Britain offers a warning, Crampton argues: its Pension Schemes Act 2026 lets ministers force default funds to put as much as 10% into assets the state names, 5% of it reserved for British firms.
The government’s $260.72
He also takes aim at the state’s own payment. The government adds $260.72 a year. If it believes that payment dilutes the saver’s ownership, he says, savers should be able to refuse it and the entanglements. The employer’s half, he adds, comes out of wages over time.
Crampton also sees a human cost. Picture a part-time worker on low pay, earning less than NZ Superannuation would give, forced to save when money is tightest. Or a founder who would rather sink funds into the firm than into shares, and borrows more just to meet the KiwiSaver payment.
Proposed guardrails
His New Zealand Initiative note offers preliminary options. One is a mandate protection note: a Crown promise attached to every account, paying out if a future government restricts investment choices without letting savers leave. Another requires that any imposed mandate be costed, with the effect on the balance printed on the annual statement. The note also says a government that harmed retirement savings should have to let people opt out or tally the cost and compensate them.
“The guardrails we suggest are starting points,” Crampton said in the note’s release. Parliament cannot bind its successors, he concedes. It can make a raid on savings costly and visible.
Sources
- Compulsory KiwiSaver would need guardrails to ensure Govt doesn't direct where money is invested – Eric Crampton (NZ Herald)
- Guardrails for a Compulsory KiwiSaver (The New Zealand Initiative)
- National to make KiwiSaver compulsory, if elected (RNZ)
