%0 Journal Article
%T KiwiSaver and Retirement Adequacy
%A Kirsten L. MacDonald
%A Robert J. Bianchi
%A Michael E. Drew
%J Australasian Accounting Business and Finance Journal
%D 2012
%I University of Wollongong
%X Investors face a long and uncertain journey to retirement and beyond, particularly wheninvesting in new defined contribution schemes such as New Zealand¡¯s KiwiSaver. This paperseeks to provide positive insights into the design of KiwiSaver by assessing the recentlyannounced move from 4 to 6% minimum contribution rates using stochastic simulation. Weconsider retirement adequacy from two perspectives: (i) multiples of gross final earningsachieved during the accumulation phase; and (ii) replacement rates of salaries during thedecumulation phase. The findings reveal that an increase in the contribution rate from 4 to6% dramatically increases the probability of investors reaching a retirement target of eight (8)times final earnings, from 6% to 40%. However, despite the shift in lifetime contributions inthe right direction, the simulation analysis suggests that, in the majority of scenarios,KiwiSaver investors will not achieve an adequate retirement target.
%K KiwiSaver
%K retirement outcomes
%K contribution rates
%U http://ro.uow.edu.au/aabfj/vol6/iss4/5