9 August 2022

Existing retirement savings systems need improvement.

Management at Lifetime Retirement Income believes that the retirement savings industry needs to lift its game if it wants to help prevent hardship among the elderly in future. Managing director, Ralph Stewart, goes as far as to accuse the industry of “immaturity” and even “financial illiteracy”.

He argues a lot of the industry problems stem from general solutions to savings questions, not bespoke programmes that meet the individual needs of elderly people. Stewart's comments came in the wake of a special research programme by Te Ara Ahunga Ora Retirement Commission, which delved into the living conditions of elderly people by looking at six focus groups.

Those groups spanned gender, ethnicity and regions, and comprised three sets of people with total annual household income under $50,000 and three with income over $50,000. That income included pensions, wages and returns on investments.

The research found there was intense gratitude across all groups for regular payments of NZ Super, with people joking they would be “living on the streets” or “robbing a bank” without them.

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But it also found NZ Super was not enough to live on and the problem was compounded by current economic conditions. High inflation was making it harder to pay daily costs, and the high price of petrol was preventing some people from leaving the house, causing feelings of isolation. Even food could be a problem, with people only buying food in bulk or shopping exclusively for specials. Other problems were high home maintenance costs and higher rates and body corp fees.

The report argued that reducing the impact of these problems in future would require encouraging people into early pathways to homeownership and urging them to consider long-term consequences when making significant life decisions. Ralph Stewart thinks the retirement savings industry can help deal with these problems here but it needs to get better at doing what it does.

Stewart says the industry must change from a generalised approach to looking at the financial condition of each individual on a personalised basis.


“This might sound like I am talking my own game, and I don't mean to, but we have put a lot of time effort and money into providing a multi-variant calculator,” he said.

Ralph Stewart

Ralph Stewart

It takes five variables that are impossible to put onto a KiwiSaver statement and allows individuals to make their own choices.

Stewart says these variables include things like life expectancy and taxation levels, and these things need to be assessed dynamically, and adjusted as people get older.


“You have got to bear in mind not just investment returns, but tax rates,” Stewart said. “For people in retirement, their tax rates are very different to when they are earning and their tax rates tend to be lower. For example, a tax rate of 17.5% and a tax rate of 10% could mean a difference of $100 a week.”

Mortality expectations were another issue. “If you are a male aged 64, and in good health, you are probably going to live to 88. We are going to add two years to that, call it 90 and that is a safe bet, we will calculate your income off of that". But as people got older, he said, their life expectancy advanced as well, and so adjustments needed to be made in later life to recalibrate how much longer their money needed to last.

Stewart says dynamic and personalised assessments are vital to get a real idea of the retirement income that people need. This latest debate came in the wake of information that 40% of people over 65 have virtually no income apart from their superannuation and another 20% have only a small income.

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Written by:

Eric Frykberg

Semi-Retired, Eric worked in journalism for 45 years across print, radio and television, in New Zealand, Australia and Britain. He has specialised in business, finance, energy, mining, transport and agriculture. He was also foreign correspondent for RNZ for many years. He can be reached on

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