Unwillingly thousands of temporary migrants could be years behind in their retirement savings compared to where they could be.
Temporary migrants living in New Zealand on work, visitors or student visas are not allowed to join KiwiSaver until they are changed to a resident-class visa.
A recent report by the Auckland University of Technology and funded by Te Ara Ahunga Ora Retirement Commission looked into the impact of this policy and how it could present disadvantages to people living in New Zealand on temporary visas. The research followed 70,305 migrants over ten years and found that about 10,000 of these migrants were still in New Zealand on temporary visas after five years. The estimated loss in savings from this time (including interest gained over time) reached $36,000-$51,000 by the time the migrants reached 65 years old.
This amount could significantly impact one’s retirement, and while people could be using other retirement saving methods, they’re unlikely to be getting the same benefits Te Ara Ahunga Ora Director Dr Suzy Morrissey says.
"KiwiSaver is designed to require little effort and remove the usual barriers to long-term investing - so the support is just not there for these people. Contributions to KiwiSaver are supplemented by the government and employers, allowing 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".
Dr Morrisey stated that those who left New Zealand wouldn’t be allowed to take government contributions, so only their personal contributions, employer contributions and any interest earned on those would leave the country.
A new group will likely miss out on a decent chunk of their retirement savings every year. Over ten years, this could add up to around three billion dollars being missed out on by migrants. That is an immense disadvantage for temporary migrants in their later years as New Zealand residents.
After falling in love with the country while visiting family, Rebecca moved to Auckland from London in 2019. 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 obtaining. "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 the potential compounding growth of those funds". "It could be a little longer whilst I wait for my residency visa! I know many people who have been ineligible for KiwiSaver for much longer".
"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" says Rebecca.
What can you do to mitigate the loss from not having access to KiwiSaver?
Researching investing can help you make the most of your money and improve your efficiency with your money; budgeting and saving money for the future is an excellent place to start. Seeing a specialised financial adviser can help you decide where to place your money and create personalised strategies to help you achieve your goals.
When you have a KiwiSaver, it is crucial to be in the correct fund to ensure you are not missing out on any potential returns and creating a more considerable loss. To find the right fund and provider suited to your needs, complete the National Capital HealthCheck.