He iti te matakahi, pakaru rikiriki te tōtara.
A wedge may be small but it can fragment the tōtara.
A small effort properly applied can achieve success.
Kupu whakataki nā te mana ahungarua Foreword from the Retirement Commissioner
After a period of exceptional volatility, we expect the next four years covered by this document to include ongoing challenges. We anticipate further financial headwinds, and that a growing percentage of people will enter retirement with a worryingly heavy reliance on New Zealand Superannuation (NZ Super).
This means that equipping people with tools and confidence to manage their economic lives becomes even more crucial.
The implicit assumption underlying NZ Super is that it is received by those who own their home outright, or who have affordable and accessible public housing.
Today, for 40% of retirees NZ Super is their only income and a further 20% just have a little more to top this up. An increasing number of superannuitants are paying rent, and this is expected to be 100% more by 2048 compared to 2020 1.
Currently one in five people are continuing to pay a mortgage after age 65, and as ownership patterns change, extra support is likely to be required by a growing number of people.
This changing environment makes my role of Retirement Commissioner, and that of my team, as relevant, if not more challenging than ever.
We are here to promote stability in retirement income policies and to provide the Government and public with trusted information, contributing to debates related to retirement with impartial and robust evidence. We will call for action where necessary.
Through our purpose we are focused on helping people with not only information and skills but the confidence they need to improve their financial futures. It’s this aspiration which has seen a shift from referring to one of our workstreams as financial capability to financial wellbeing. Financial capability builds skills and knowledge, encouraging people to change their mindsets towards money so they feel more confident and in control: ultimately being positive about their financial wellbeing, which is where we want people to be.
It’s no small task and not something we pretend to tackle alone. This is why we place so much importance on maximising the collective impact of the National Strategy for Financial Capability. And continuing to hero Sorted, reminding New Zealanders that they have an independent and impartial place they can rely on to find financial guidance with no strings attached.
We know retirement does not look the same for everyone, and that a ‘better retirement’ is relative. For many it is a time of rest and relaxation, while for others it is a time of continued service to their community. Some do not live to experience it at all.
Whatever retirement means to people it will still require long-term thinking and planning which is difficult for both people and governments to grapple with, particularly with so many short-term challenges.
I have been considering how best to organise our statutory responsibilities, given the significant environment and economic changes since the 1992 Todd Task Force report. That report, among other things, recommended that a politically stable long-term retirement environment needed to be championed by an independent Retirement Commissioner, to give New Zealanders the confidence to plan. In the past 30 years the Commission has taken various approaches to tackle the opportunities available to it; from launching the trailblazing Sorted website in 1992, to delivering Sorted in Schools from 2019, to relaunching a tightly focused National Strategy for Financial Capability in 2021, to delivering in-depth triennial retirement policy analyses to Government.
However, the last few years of a global pandemic provided unprecedented disruption, and pressure on government funding, that has sharpened our focus on what we need to do within limited resource. In the three decades since the Todd report, the portable workplace savings scheme KiwiSaver has been introduced; the financial services industry has broadened and extended with all providers regularly communicating useful financial capability support; the community sector includes a national network of financial mentors, and a helpline, that provides one-on-one support to those in financial distress; and in a post-settlement environment iwi are developing new ways to support their people.
Government funding for financial capability initiatives is now stretched across a number of agencies with no clear overarching strategy. In the context of such significant change Te Ara Ahunga Ora needs to redefine its place and I hope to have useful strategic conversations across the public and private sectors to ensure that activities are aligned as best they can be.
This Statement of Intent (SOI) sets out our strategic intentions and undertakings for how we will achieve our purpose over the medium-term period 2023 – 2026. The SOI is complemented by an annual Statement of Performance Expectations which focuses on the current year’s work programme and sets out our annual performance measures and forecast financial statements.
Mana Ahungarua / Retirement Commissioner
The Retirement Commissioner’s role was first established under the Retirement Income Act 1993 and continued under the New Zealand Superannuation and Retirement Income Act 2001 which sets out the Commissioner’s functions, powers and duties. The Retirement Commissioner is appointed by the Minister of Commerce and Consumer Affairs and is an Autonomous Crown Entity under the Crown Entities Act 2004.
This Statement of Intent sets out Te Ara Ahunga Ora’s intentions and undertakings for the medium-term period 2023 – 2026.