This is probably the best idea I've heard in a while. The money is going to go into the KiwiSaver account anyway, if we put it in there 20 years earlier, it will accrue and compound interest from much earlier on.
AI Summary of the 60 page paper:
Title idea:
🇳🇿 “Kids KiwiSaver”: auto-enrolling every NZ child at birth to fix low savings & inequality
TL;DR:
A new report from the Institute for Democratic and Economic Analysis (IDEA) proposes “Kids KiwiSaver” – every child in NZ would be automatically enrolled in KiwiSaver at birth, given a government kick-start, and their parents’ small contributions would be matched by the state, with extra help for low-income families. By 18, most kids could have $10k–$20k+ in savings, and total national savings could rise by $3–$18 billion within 18 years, depending on design.
What is “Kids KiwiSaver”?
- Every child born in NZ is automatically enrolled in a KiwiSaver-style account at birth (via the existing Smart Start process).
- The government pays a kick-start into the account (the report models amounts like $260–$1,000).
- Each year, the government matches small parental contributions (e.g. dollar-for-dollar up to $130–$250/year).
- For kids in low-income families, the government would also pay direct top-ups into their accounts so they don’t miss out if parents can’t afford to save.
- At around 18, the account rolls into a normal adult KiwiSaver account (or something very similar), mainly for retirement and first-home deposits.
The goal: every young person hits adulthood with a real financial asset, not just debt and vibes.
Why do this?
The report gives three main reasons:
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NZ’s national savings are low
- Australia has about 5× our population but 35× our savings, largely because of compulsory super.
- Average KiwiSaver balances here are only about $37k.
- A dedicated child scheme would build up a big new pool of long-term capital in NZ.
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Asset-based welfare (not just income support)
- Wealth (savings, investments, housing) shapes life chances in ways income alone doesn’t.
- International studies show young adults who start out with even modest capital have better employment, earnings, and health outcomes a decade later, even after controlling for family background.
- Kids KiwiSaver is about giving everyone a starter stake in life, not just those with wealthy parents.
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Stopping KiwiSaver from “hard-coding” inequality
- Standard KiwiSaver is tied to PAYE income, so low-wage and precarious workers end up with much smaller balances.
- Making KiwiSaver compulsory for adults (as some want) risks aggravating this, because those with low incomes would be forced to lock away more of their already thin pay.
- A child-focused scheme can be designed so the biggest boost goes to kids from low-income families, not just the middle class.
Key design choices the report walks through
The report doesn’t pick one “perfect” design; it lays out trade-offs and models six scenarios. Main knobs you can turn:
What do the numbers look like?
Using reasonable assumptions (returns similar to the NZ Super Fund, around 7.8%, and “low-income” roughly defined as families receiving a main benefit), the report models six scenarios.
High-level takeaways:
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First-year cost to govt:
Ranges from about $21m to $85m, depending on generosity.
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Total savings after ~18 years (by 2043):
Ranges from roughly $3b to $18b in new national savings.
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Balances for individual kids at 18:
- In minimalist designs, kids might have a few thousand dollars if parents contribute, and only ~$1k if not.
- In more generous, targeted designs, low-income kids can reach $20k+, even with modest or zero parental contributions, and $40k–$50k+ if parents can put in at the cap each year.
The report nudges readers toward “hybrid” designs that:
- Put extra weight on poorer kids,
- Keep lifetime public cost manageable, and
- Still allow middle-income parents to meaningfully participate.
Common objections & how the report responds
The report has a whole section on likely pushback:
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“Why not just make KiwiSaver compulsory for adults?”
- That would still tie savings to income and likely amplify inequality. Kids KiwiSaver can be designed to flatten the gap instead.
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“This will undermine NZ Super / privatise social services.”
- The proposal is explicitly in addition to NZ Super, not a replacement. It’s framed as a long-term investment in national savings and youth assets, not a dismantling of the public pension.
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“Middle-class welfare?”
- Depends on design. Targeted top-ups and contribution caps can ensure most public money flows to low-income kids, while still enrolling everyone for political durability.
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“These savings won’t be ‘extra’; people will just reshuffle money.”
Big picture
The report’s core idea is simple:
“Every young person could reach 18 with $10,000–$20,000 saved in their account.”
Instead of only the children of wealthy families getting help with a deposit, study, or a secure retirement, every kid would have at least a small stake – built gradually, with the state deliberately tilting the playing field toward those who start with the least.
For anyone interested in NZ savings policy, inequality, or how to actually do “asset-based welfare” instead of just talking about it, this report is a pretty substantial blueprint.
Here is a direct link to their 2-page info brochure.
