The opportunity cost: why NZ migrants might be missing out on billions in retirement

Thousands of temporary migrants may be unwillingly falling years behind in their retirement savings.

Those living in New Zealand on temporary work, student or visitor visas are not currently allowed to join KiwiSaver until they transition to resident-class visas.

This could be resulting in billions of dollars lost from the pockets of future New Zealand-based retirees, as these people are unable to access personal, government or employer contributions to KiwiSaver for years of their working lives.

A recent report, completed by AUT and funded by Te Ara Ahunga Ora Retirement Commission, investigated the impact of this policy and how it could be disadvantaging to those living in the country on temporary visas.

The research followed 70,305 migrants over 10 years, and found that after five years, about 10,000 of these migrants were still in New Zealand on temporary visas. The estimated loss in savings from this time (including interest gained over time) was $36,000-$51,000 by the time they reach 65 years old.

Te Ara Ahunga Ora Director, Policy, Dr Suzy Morrissey says this amount could significantly impact one’s retirement, and while people could be using other forms of retirement saving methods, they’re unlikely to be getting the same benefits.

“KiwiSaver is designed to require little effort and remove the usual barriers to long-term investing – so for these people the support is just not there. Contributions to KiwiSaver are also supplemented by the government and employers, which allows us to save much more than the average savings account.

“If temporary migrants could access KiwiSaver, they’d have a much fairer start on their journey to retirement. For those who left New Zealand, they wouldn’t be allowed to take the government contributions, so only their personal and employer contributions and any interest earned on those would leave the country.”

Dr Morrissey noted that the cumulative impact of this policy is likely to be sizable, considering the study followed only one annual cohort of migrants.

“Every year, a new group is likely to be missing out on a decent chunk of their retirement savings. Over ten years, this could add up to over three billion dollars being missed out on by migrants. That is a significant disadvantage for them in their later years of life.”

Rebecca moved to Auckland from London in 2019 after falling in love with the country while visiting family. After three years living and working in New Zealand, she now plans to retire here, but is still on a standard savings account and feels frustrated to think of the savings she’s missed out on.

“Often people don’t think about saving for retirement unless they’re directly contributing to a fund like KiwiSaver. I’ve missed out on three years of contributions and potential compounding growth of those funds. It could be a little longer whilst I wait for my residency visa! I know a lot of people who have been ineligible for KiwiSaver much longer than that.

“I want to be able to start building my life and planning for the future. KiwiSaver would be a great opportunity to assist me in saving for my first home and looking after my money and investments properly.”

This research has been conducted as part of the 2022 Review of Retirement Income Policies in response to one of the terms of reference set by the Government. This collation of data will feed into the final report of recommendations from the Retirement Commissioner in response to the work that has been undertaken for the review.


Notes to editors:

2022 Review of Retirement Income Policies
The Retirement Commissioner is required by law to carry out a Review of Retirement Income Policies (RRIP) every three years in response to terms of reference set by the Government.
For the 2022 RRIP we have been asked to undertake research relating to three broad areas comprising New Zealand Superannuation, housing and private savings including a focus on decumulation and KiwiSaver.

Media contacts:  
For more information, or to arrange any interviews contact: 
Georgette Dawbin - Communications Specialist
Te Ara Ahunga Ora Retirement Commission 
Ph: +64 21 0854 1230