1 Introduction
There is an ongoing debate, both in New Zealand and overseas, about the adequacy of saving. This can be addressed at two levels: at the aggregate level of total savings in the economy; and at the level of individual households where the principal focus is on accumulation for retirement. This paper is concerned solely with the latter and does not address broader issues of saving in the economy. In particular it focuses on one aspect of retirement wealth accumulation: that of workplace and personal superannuation schemes. The recent Periodic Review Group (2003) considered that there would be value in promoting greater use of workplace savings schemes and recommended that the Government establish a body to develop recommendations.
The central question addressed in this paper is: does having a workplace or personal superannuation scheme result in a higher level of accumulation for retirement? A related question is: to what extent do those who have such schemes fully offset their savings in the scheme by correspondingly lower savings in other vehicles; ie, is there evidence of substitution for other forms of saving, after allowing for differences in personal characteristics?
To address these questions we draw on evidence from the Household Savings Survey (HSS) conducted in 2001.[1] The definitions of the schemes are set out in Section 2. The basic results from the survey are summarised in Appendix A. In Section 3, the results of statistical tests of the effect of participation on total net worth are presented. This is followed by results which report on tests designed to determine whether those enrolled in superannuation schemes substitute them for other forms of saving (Section 4). Discussion and conclusions follow in Sections 5 and 6.
Notes
- [1]See Statistics New Zealand (2002).
