Kiwis raid retirement savings for housing

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By Leith van Onselen

Nick Xenophon would be proud. A record number of New Zealanders are raiding their retirement savings to pay a house deposit. From Interest.co.nz:

In its 2016 KiwiSaver report the Financial Markets Authority (FMA) notes “huge” growth in the withdrawal of KiwiSaver funds by members striving to buy a house.

“Nearly $500 million was withdrawn for this purpose in 2016, up from $214 million in 2015. The number of KiwiSavers making use of this facility more than doubled year-on-year, from 14,584 to 31,368. The average withdrawal increased from $14,658 to $17,896,” the FMA says.

The chart below is taken from the FMA’s report.

ScreenHunter_15289 Oct. 05 14.57

The FMA figures are for the year to March. Since then savers have continued withdrawing money from KiwiSaver to get into the housing market. The total is now at $721 million with $42.88 million withdrawn in April, $50.4 million in May, $40.29 million in June, $41.91 million in July, and $49.89 million in August.

Meanwhile, the FMA says total KiwiSaver membership has grown, but at the lowest level since reporting began, with a 4% increase this year compared to 14% in 2012…

Forgive my ignorance, but wasn’t the whole point of KiwiSaver to fund New Zealander’s retirement, not to prop-up the housing ponzi?

Perhaps our Kiwi cousins should have a chat to Canada’s Garth Turner, who oversaw the introduction of a housing-super system in Canada in the 1990s, and has admitted that it was a massive mistake, placing further upward pressure on Canadian house prices and putting at risk retirement savings.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.