A huge week for IDEA
Both New Zealand First and National now endorse Kids KiwiSaver
Summary:
National announced at the weekend that it would implement a Kids KiwiSaver style policy with a $1,500 kick-start payment
This follows New Zealand First’s endorsement of the idea last month
This remarkably rapid uptake of one of IDEA’s first proposals is extremely pleasing and thanks in large part to you, our supporters
A Boost for good ideas
Image credit: Wikimedia Commons
The National Party this week endorsed the concept of Kids KiwiSaver, saying that if re-elected it would introduce a Baby Boost policy under which every newborn is enrolled in KiwiSaver with a $1,500 kick-start. This follows New Zealand First’s announcement last month that it would do the same, though with a $1,000 kick-start.
The announced policies are not quite the same as the Kids KiwiSaver scenarios modelled by IDEA, which would include ongoing support for parents to contribute to the accounts. This could involve matched savings (the government chipping in $200 a year if parents contribute $200, for instance), direct payments into the accounts of poorer children, or a combination of both.
Under National’s proposal, if parents don’t contribute to the accounts, the $1,500 kick-start will become around $5,000 by age 18 (assuming normal investment returns). Support for ongoing parental contributions, by contrast, could plausibly see the accounts swell to around $10,000-20,000 in the scenarios IDEA modelled.
IDEA has not been the sole advocate of children’s savings schemes. (Indeed Winston Peters was quick to claim that National had “copied” his idea!) Other voices have joined us in calling for Kids KiwiSaver, notably the former Mercury CEO Fraser Whineray. Ngāi Tahu has a pioneering savings scheme called Whai Rawa that has a strong focus on children. Similar schemes overseas, sometimes called Baby Bonds, are increasingly popular.
At any rate, we are delighted to see that one of the first policies we developed has got picked up so quickly. As our research director, Max Rashbrooke, said on Morning Report this Wednesday, political parties seem to have grasped that the earlier the savings journey starts, the better. And if KiwiSaver is to become compulsory (as National also advocates), and people start saving 12% of very different incomes, it will be all the more important to try to level the playing field and ensure that even poorer children are starting life with a firm financial foundation.
