The 2020s haven’t exactly been a golden age for getting ahead.

First came COVID, when job security evaporated overnight. Then the cost-of-living crisis, when everyday expenses surged far faster than incomes. Now, global instability is pushing fuel prices higher again, squeezing household budgets even tighter.

For many New Zealanders, “getting ahead” has quietly become “just getting through”.

And when money gets tight, people make trade-offs: power bill or groceries, doctor’s appointments or school supplies, rent or savings. Today or tomorrow.

Which makes the latest change to KiwiSaver understandable but potentially problematic.

From April 1, default contributions rise from 3% to 3.5% for both employees and employers. On paper, this is a good move. At 3%, most people were never going to build a retirement balance that delivers anything close to financial security.

Contributions will rise again to 4% in 2028. But some observers have argued they need to rise to around 12%. Even at that level, others have said, four in ten people still won’t retire with enough.

So yes, we need higher contributions.

But here’s the problem: increasing contributions assumes people can afford to save more. Many can’t, which means KiwiSaver changes from an incentivised saving scheme to a financial penalty.

The flaw in the system

When KiwiSaver was introduced, policymakers made a deliberate design choice: employee........

© The Conversation