The conversation about a ‘Kids KiwiSaver’ heats up

Plus: Food poverty in a food-producing nation: how is it possible?

Summary:

• The government is cautiously positive about suggestions that under-18s in KiwiSaver should get matching government contributions just like adults do

• Such schemes have been proposed before, and – if well-designed – could have huge benefits in reducing long-term disparities, boosting savings and enhancing financial literacy

• The cost of such schemes is likely to be the biggest obstacle, but should be seen as an investment in individuals’ and the country’s long-term prosperity

• Elsewhere, a new report finds 15-20% of people unable to properly afford food, despite the riches available in this agrarian nation

Image credit: Kore Hiakai, ‘Ka Mākona’ report

The transformative potential of saving schemes for children

A ‘Kids KiwiSaver’ scheme could be a small step closer after the government tentatively welcomed ANZ’s call for it to make contributions to KiwiSaver accounts for under-18s. And the wider debate is a reminder of the potential that matched savings schemes have to dramatically reduce long-term economic disparities.

Currently, children can be enrolled in KiwiSaver – ANZ has 50,000 in its scheme alone – but the government does not make matching contributions until people turn 18. It then matches the first $1,042 that people contribute annually, at a rate of 50c in the dollar, for a maximum state contribution of $521 a year. The idea is to encourage at least a minimal level of savings. There also used to be a kick-start payment to each newly enrolled adult, although that was removed under John Key.