Kiwisaver Survives Readers' Challenges

I was surprised, too, that only two readers responded to the challenge in my last column "to come up with a government change - that's at all likely to happen in a democracy - that would make KiwiSaver members regret having signed up now."

Perhaps that's because, in that column, I already discussed some readers' anti-government arguments. Here's a summary:

· The government might make it hard to take contributions holidays. That's highly unlikely. It would be unfair given that non-employees can simply stop contributing. And it would discourage those not yet in KiwiSaver from joining.

· The government might reduce KiwiSaver incentives. That's quite likely, but people could simply stop contributing at that point. They would still have savings from "the good old days" - in other words, now.

· The government might make KiwiSaver compulsory. That might happen, too. If it did, the incentives would surely be dropped, so those who had joined before that would be the winners, having gained from the incentives.

In response to my challenge, one reader wrote: "What could make people resign from KiwiSaver? The answer is very obvious. It would happen en mass if the Government of the day decided to reduce NZ Super for those receiving KiwiSaver payments. You will point out how unlikely that is. It couldn't possibly happen eh? Well it is already happening.

"Recipients of money from similar schemes overseas are currently having their NZ Super docked so they receive nothing from their overseas pensions which they and their employers have contributed to in addition to the regular state pension in the country concerned."

My response: How overseas pensions interact with NZ Super is a different issue, which I won't go into here.

But no, I wouldn't say it's unlikely a future government will reduce NZ Super for better off retired people - including those with KiwiSaver savings. It could well happen.

I doubt, though, that New Zealanders would be silly enough to then quit KiwiSaver.

Firstly, I'm sure the reduction wouldn't be $1 less of NZ Super for every dollar received from elsewhere. That would put off younger people from saving. It's much more likely to be, say, 50c less. People with savings would still be better off than those without.

Even if the reduction were dollar for dollar, I would far rather have my own savings than be reliant on a small government handout that could change. Wouldn't you?

The other reader has broader worries: "I am sorry to burst your bubble, but KiwiSaver is a joke. The only people with a hope in hell of seeing any return on their savings are the 62-year-olds, and that is being hopeful.

"I know you will ignore me and my predictions and I am sure you will not be able to comprehend the financial collapse we are on the edge of." He enclosed a letter about climate change, oil prices, food prices and so on, which, he said, "spells it out clearly enough."

My response: If we go into financial collapse, we will have more to think about than, "I wish I hadn't joined KiwiSaver".

But I have enough faith in the world's collective wisdom to bet that even newborns - let alone 62-year-olds - will live to appreciate being in KiwiSaver.