A wake-up call for employers

Debbie Gyde, GM of Customer Partnerships at AMP, highlights some of the stark realities of retirement for employees and what HR leaders can do to help with their people’s financial wellbeing.

New Zealanders are ‘sleepwalking’ into retirement, according to Retirement Commissioner Jane Wrightson. The commissioner’s ‘somnambulism’ analogy to our retirement and KiwiSaver preparedness is just as stark now as it was when she made it two years ago.

Employers are uniquely placed to have a positive effect on the retirement readiness of their people, through their responsibility to promote KiwiSaver as well as financial education and support. It could be argued that the need for employers to provide this support has never been more critical than it is today.

FACT: New Zealanders are not prepared for retirement and are over-reliant on the New Zealand Superannuation Scheme, which will just not be enough to support most retirees.

FACT: New Zealanders are behind the ball in terms of retirement savings, especially compared with our Australian cousins who have a mature, mandatory superannuation scheme with contributions moving to 12 per cent in 2025. New Zealand’s current default rate is just 3 per cent.

New Zealanders are ‘sleepwalking’ into retirement.

It’s clear that employers have an important role to play in lifting the preparedness of their workforce and contributing to better financial outcomes. Indeed, some employers are already choosing to provide additional contributions as part of their benefits package, either into KiwiSaver or other products like the NZ Retirement Trust, a workplacesponsored savings scheme.

While it’s never too late to put a plan in place, starting early can make a big difference to future outcomes. New Zealand has an aging population and an aging workforce, with significant numbers moving into retirement over the next 10 to 20 years. It’s imperative that employees understand the retirement gap they may have. Having financial security in retirement is critical. Without it, there is not only a poor quality of life but a lack of choices.

In the Retirement Commissioner’s recent ‘KiwiSaver Opportunities for Improvement’ report, Jane Wrightson states the KiwiSaver default contribution rate should rise to at least 4 per cent from both the employee and employer. AMP agrees with this, as well as the commissioner’s further recommendation on removing the ‘total remuneration approach’. The intention of KiwiSaver needs to be honoured rather than the salary sacrifice loophole being exploited.

From an education viewpoint, it is vital employees know that KiwiSaver is an investment, not a savings plan, and that by starting early and choosing the correct fund for their stage of life, the retirement wealth gap can be significantly reduced. Because when your employees are in control of their money, they also feel in control of their lives, happier, less stressed at work and more empowered.

Employers have an important role to play in lifting the preparedness of their workforce and contributing to better financial outcomes.

The question is, are your employee benefits matching this sentiment and are they still fit for purpose? Are they compelling enough to attract the best talent and retain them?

If not, the consequences can be severe. Research shows:

• nearly a third of financially stressed employees would be attracted to another employer who cares more about their financial wellbeing

• 70 per cent of New Zealanders are worrying about money, driven by high inflation, high interest rates and job security concerns, which is negatively affecting performance in the workplace

• of productive time, 156 hours (or close to four weeks per employee) per year are lost to financial stress

Yes, it’s also tough for businesses right now, but that’s exactly the time when the benefits of inciteful, employeecentric decisions made by employers can be maximised and magnified.

If your employees can see the priority the business is placing on their financial wellbeing in the toughest of times, imagine the message that is sending them about an organisation’s culture and values. We all know there are no better brand champions than appreciative employees. Attract and retain. It is central to business growth.

But don’t just do this to be a good employer, as admirable as that is, do it because of the bottom-line benefits it can also bring your business.

Because while the immediate benefits of these programmes are felt by employees, it is a win-win for employers. For a business to be sustainable and prosperous in the long term, recognising the importance of employee financial wellbeing and retirement readiness as crucial pillars of workplace wellbeing is essential.

Debbie Gyde is General Manager of Customer Partnerships at AMP. The company has developed a market-leading workplace wellbeing programme for corporate clients, to help employers address the burning financial issues raised in this article. AMP is on a mission to help Kiwis prepare for a secure financial future. The message is clear: “Unfortunately, retirement isn’t free. Fortunately, we can help with that.” If you’d like more help or information, contact our team via amp.co.nz/for-employers.