The Government recently announced more changes to KiwiSaver rules around First Home Withdrawals for farmers and people in service tenancies. Milford General Manager KiwiSaver and Investment Funds, Murray Harris, talks to Ryan Bridge about the drawbacks of over-tinkering with the system, and how to unlock KiwiSaver’s full potential.
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Bridge talks Business: 17 March 2026
Episode Transcript
Ryan Bridge
Kia ora and welcome to Episode 67 of Bridge talks Business with Milford. Great to have your company. We love beating the Aussies, don’t we? Whether it’s rugby, netball, cricket, pretty much anything. We just love beating them. Sadly, for this side of the ditch, we’re losing the game of superannuation. The average Australian super account balance today is more than $480,000 at the age of 65. Ours, $70,000 at the same age in KiwiSaver. There are plenty of reasons for this, of course, their scheme has been running since the 90s. But Murray Harris from Milford reckons there’s another important factor at play here. And he’s on the podcast today to explain it to us.
First, here’s your top five business bits from the last seven days.
1. Uncertainty reigns with the war. Investors wary that while a prolonged closure of the Strait of Hormuz could be damaging for the world, a resolution could also appear quickly. And this will be in the rearview mirror.
2. Market pricing action has been choppy, but tame. Arguably the biggest moves have been in investor pricing of interest rate moves. They are betting central banks may hike rates in many parts of the world due to the increase in inflation from the high energy prices.
3. Speaking of – US inflation data was in line with expectations last week. It remains above the Fed’s target. The US economy is better insulated against the energy shock. But higher oil prices will still be seen in inflation data should these prices persist.
4. This week we have a raft of central bank meetings across the US, Europe, the UK and Australia. Their comments will be watched very closely for clues on how they’re thinking about and how they’re talking about this shock, whether they’ll look through it or not.
5. Elsewhere investors will continue to focus on the geopolitics, and markets will likely remain quite jittery until clarity around a resolution appears.
Alright, let’s sit down for today’s feature interview for the podcast. Just a reminder, this segment is informational only and should not be considered financial advice. I’m delighted to have back on the podcast today Murray Harris, who is General Manager of KiwiSaver and Investment Funds at Milford. Murray, welcome back to the show.
Murray Harris
Thanks for having me again.
Ryan Bridge
Great to see you. Today’s topic, very important one, because the Aussies are beating us at superannuation, and we don’t like to be beaten.
Murray Harris
No.
Ryan Bridge
But your issue is with tinkering, right? That’s the big issue we’re talking about today.
Murray Harris
Yep. Yep. We’re never going to make KiwiSaver the success that it could be and realise its full potential if we keep tinkering with the rules and the settings. And you know, we saw the latest example of this on the first of March. The Government announced that they’re going to change the KiwiSaver Act to allow those in service tenancies to access the first home withdrawal provision. So this is where if you are living in an employer-provided accommodation, let’s say you’re a police officer from Auckland, you’re posted to a rural community or a country town, and you’re in accommodation which is provided by the police. You can’t currently buy a home, your first home, with your KiwiSaver. Because the rules are, since 2010 when you’ve been able to access your KiwiSaver for a first home purchase, is you have to live in it for the first six months, at least. And look, you know, that seems fair enough that you can allow people that are in a service tenancy to get on the property ladder and access their KiwiSaver to buy their first home, and it applies to, you know, rural teachers, doctors, farm workers.
But the other part of the announcement was around allowing KiwiSaver to now also be withdrawn under this first home provision for a first farm buyer. So you can purchase a farm. It’s difficult to purchase a property on a farm because normally it’s one of the assets of the farm, so you’ve got to purchase the whole farm. So you’re now able to access, or will be able to access, KiwiSaver to purchase a farm.
Ryan Bridge
Now what’s wrong with this? Because from where I’m sitting, I’m like, well, if you have the ingenuity, you know, you’re familiar with it. It’s your line of work. It’s your dream. It’s your savings. You know, why should you not be able to invest it in a way that you might see fit? What’s the potential harm in doing something like this?
Murray Harris
Look, don’t get me wrong. Nothing against farms or farmers. Right. I grew up in the Manawatu, and I’ve got friends and family still involved in farming. There’s two issues here. One, it’s the constant tinkering with the rules. KiwiSaver is only 20-years-old or not even, and there’s been something like 30 rule changes. Well, that’s a lot, right? So that’s unsettling for membership.
The real issue here is that this is tinkering with KiwiSaver, which should be focused as its core purpose, retirement savings. It’s now opening the door to allow you to purchase a business, which is what a farm is. And look, we’d have the same issue, whether it was any other sector of the economy or industry that was accessing their KiwiSaver to buy a business. And this is the leakage that starts to diminish the real quality and the real potential of KiwiSaver. And we’re already hearing other sectors of the economy and businesses saying, well, why couldn’t we access our KiwiSaver? Now imagine if you’re a, I don’t know, you’re a chef, you own a restaurant, you want to buy a restaurant. There’s accommodation upstairs. Could you do that? You’re a mechanic. You want to buy your first garage and there’s accommodation out the back. You’re going to live on the premises. It’s really no different. So the real issue here is it’s allowing access to KiwiSaver for a business and it’s opening the door and it’s that leakage around what KiwiSaver should be and its core focus and its only focus is saving for retirement.
Ryan Bridge
It’s almost like opening the floodgates. Once you give an exemption for one, you potentially open up for the rest.
Murray Harris
That’s right. And that’s the issue.
Ryan Bridge
In terms of other countries, does everybody else have, you know, I mentioned Australia earlier on, does everybody else have really stringent rules about this?
Murray Harris
Yeah. Look, this is why the likes of Denmark, the Netherlands, Ireland and our friends across the Tasman are so successful at their retirement savings schemes. New Zealand is not a nation of savers. We’re 30 out of 32 OECD nations on the household savings rankings. We’re down between Estonia and Latvia and next is Greece. If you look at where the Netherlands, Ireland, Canada, Australia are in household savings, much, much higher, much more successful systems. Sure Australia’s been going longer than us, 34 years, right. They’ve amassed $4 trillion in retirement savings. It’s the fourth largest pool of savings in the world. The average balance for a 65-year-old in Australia is $400,000 Australian dollars. The average balance for a New Zealander in KiwiSaver at age 65 is $70,000. That is not much of a retirement.
Ryan Bridge
No. The other interesting thing about the countries you’re ranking is we often think, oh, we used to be such an economic powerhouse in New Zealand and used to be higher up that table, right? Is this part of the problem that we don’t have the savings to actually allow that growth that we want to see or the economic might that we want?
Murray Harris
Well, part of it comes back to, and I know Blair spoke about this when he was talking to you a few weeks ago, is our productivity is just so low. And if you don’t have the productivity of an economy, you don’t have the extra income to be able to save. And then we’ve put a lot of our savings into housing. So really, if we’re really, really serious about saving for retirement and we want KiwiSaver to realise its full potential and be the success that it can be, we just need to be really disciplined and really focused on its core purpose. We need to set the rules. We need to set them and almost forget them, you know, let KiwiSaver do its magic and accumulate our savings over time. And that’s what these other savings regimes have done. They’ve got very stringent and strict rules around access to the money. But they’re very clear, first and foremost, the purpose of that money is to save for retirement.
Ryan Bridge
So set and forget. What else, you know, in terms of unlocking full potential, what else do we need to think about?
Murray Harris
Yeah, I mean, the biggest thing we can do is contributions. And that’s why it was so encouraging to hear the National Party’s announcement in November that, you know, they if they’re successful in the next election will set a path to 12% combined contributions between now and 2032. From in a couple of weeks’ time, 1 April, we’ll take the first step on the announcement and last year’s budget to three and a half percent employer and employee contribution. That’s great. 2028, 1 April we’ll take the next step to 4%. So we just need to keep increasing contributions. So that’s the first thing. That’s the most important thing that we can do. So that’s great to see.
Secondly is, we need to stop this nonsense really of total remuneration. It’s not in the spirit of KiwiSaver and it wasn’t the intention of KiwiSaver. This is where your employer is paying your KiwiSaver as part of your package. So essentially you’re paying their part of the contribution. So we need KiwiSaver employer contributions to be on top of wages and salary. The other thing is if we’re not going to make KiwiSaver compulsory and that’s a debate that we could have, we could at least look at making the employer contribution compulsory. And that would really, really help our low income earners. That would make a huge difference.
Ryan Bridge
So even if they didn’t pay in, the boss would still pay in.
Murray Harris
Yeah. So we set that at a level where we are now, three – three and a half. And then again, it’s about signaling this really early and making sure that companies and employers can adjust because we understand cost of living crisis. It’s tough. We’re in a war. We’ve got oil prices going crazy. It’s tough to do business. But if we signal these changes really, really early, businesses can adjust.
And look, the fourth thing is perhaps some tax incentives or offsets both for employers and employees. And that’s a feature of other successful schemes like Australia, like the UK, where when you’re contributing to your super, that money’s taxed at a lower rate than your PAYE. And if we don’t incentivise people to save, they generally won’t.
Ryan Bridge
So were those in order of priority?
Murray Harris
Probably. Yeah.
Ryan Bridge
Number one is don’t tinker and number two would be actually how much we’re contributing, that sort of thing. What is, you know, you talk about reaching the full potential. What is – sell us – you’ve given us the kind of the how, but the why. What do we get from this as a country? If we did everything that was on the list?
Murray Harris
Yeah. Yeah. Yeah. Well, look, first and foremost, much more robust and larger superannuation savings pool. And you don’t need to look far to see how, you know, what that means for people in Australia. And we all have friends and family there that are living nice retirements and got great balances. It just means that Kiwis will have a much better and dignified retirement. I mean, New Zealand super is fine and it’s there as a backstop, but it’s really only a backstop. It provides a basic income in retirement. If we want to live the retirements we all dream of, you’re going to have to provision for that yourself on top, and a lot more than what New Zealand super provides.
And then there’s the other huge benefits around more money to invest in New Zealand companies, both public and private. Again, look at Australia. The ASX over the last five years had somewhere around 400, more than 400 IPOs. In New Zealand, we’ve had 14 in 10 years. So, you know, we’re just not seeing money invested in good New Zealand companies. More money to invest in much needed infrastructure. Again, you know, we use the Australian example, but you go there – roads, rail, motorways, bridges, public transport just work so well, we don’t have that. We need money to invest here in that and KiwiSaver can play a big part in that. And then just, you know, all around better economic conditions and more money flowing through the system, people much feeling much better off.
And I guess, you know, what’s the quid pro quo for the Government, particularly if they were allowing some tax changes is it gives future governments options for New Zealand super down the track. And we know that’s not affordable, but without a really robust private savings system, it really limits governments been able to make any changes there. So look, huge benefits, huge opportunities, but we need to be disciplined and we need to be working on that right now.
Ryan Bridge
Excellent stuff, Murray. Great to hear from you as always. Thanks so much for coming in.
Murray Harris
Pleasure.
Ryan Bridge
That was Murray Harris, who’s head of KiwiSaver and Investment Funds at Milford, talking to us about the rules, what not to do in order to protect KiwiSaver, keep it growing into its full potential into the future. Thanks so much for listening. Thanks so much for watching. We appreciate you doing so. Don’t forget you can like, follow and subscribe this podcast wherever you like to listen. Until next week, don’t forget to invest in yourselves.
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