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  "description": "After nearly 20 years and billions in subsidies, no one has shown that KiwiSaver has made New Zealanders wealthier. Still, the instinct across the political spectrum is to make the scheme bigger. ",
  "path": "/is-this-a-110-billion-illusion/",
  "publishedAt": "2026-03-24T20:30:07.000Z",
  "site": "https://goodoil.news",
  "tags": [
    "Oliver Hartwich",
    "NZ Initiative",
    "Brash and Mitchell"
  ],
  "textContent": "Oliver Hartwich\n_Before joining the NZ Initiative, Oliver was a research fellow at the Centre for Independent Studies in Sydney, the chief economist at the Policy Exchange in London, and an advisor in the UK House of Lords._\n\nKiwiSaver has $110 billion in assets and over three million members. Contribution rates rise from April. Both major parties want to push them to 12 per cent.\n\nEveryone assumes the scheme is working. But no one can prove it.\n\nThe only rigorous evaluation of KiwiSaver’s impact on wealth was published in 2017 by Treasury economists David Law and Grant Scobie.\n\nLaw and Scobie found that KiwiSaver members accumulated no more total wealth than non-members. Two-thirds of contributions had simply been shifted from bank accounts and term deposits into a KiwiSaver account. New Zealanders were not saving more. They were saving differently.\n\nEconomists have long understood this. In 1954, Franco Modigliani showed that households plan their savings across a lifetime. If forced to save through one account, they save less through others. They pay down less debt or put less into the bank. Modigliani won the Nobel Prize for this work.\n\nEvidence from the US, Denmark and the Netherlands has since confirmed the pattern: between 50 per cent and 80 per cent of every mandated retirement dollar is offset by less saving elsewhere.\n\nThe Law and Scobie study is now nine years old and no more recent study has shown that the $110 billion programme does what it was designed to do. Regardless, we are about to make it much bigger.\n\nWhen advocates talk about raising “employer contributions”, they imply your boss is giving you something extra. Australia’s Grattan Institute studied 80,000 workplace agreements over three decades and found the opposite: when compulsory super went up, pay went down by almost the same amount.\n\nSo why does everyone believe KiwiSaver is a success? Because $110 billion in accounts looks like new wealth. Much of it would exist anyway, in other forms. But big numbers are persuasive and, over two decades, KiwiSaver has built a constituency whose livelihoods depend on the scheme growing.\n\nThere is also another problem. The bigger the pool gets, the more politicians eye it as a potential way to fund their preferred projects. What was sold as your retirement nest egg risks becoming a pool of capital for others to direct.\n\nAfter nearly 20 years and billions in subsidies, no one has shown that KiwiSaver has made New Zealanders wealthier. Still, the instinct across the political spectrum is to make the scheme bigger.\n\nBefore we do, we might want to ask why we expect KiwiSaver’s next decade to deliver what the first two did not.\n\n _This article first appeared in the_ NZ Initiative _and was republished by_ Brash and Mitchell_._",
  "title": "Is This a $110 Billion Illusion?",
  "updatedAt": "2026-03-24T20:30:06.923Z"
}