4.1 KiwiSaver membership

In seeking to understand KiwiSaver's impact and its effectiveness in reaching the target population, it is necessary to examine the characteristics of those who joined the scheme and those who chose not to. We posed the question: what factors most influenced the probability that a person would be a KiwiSaver member? This was addressed by estimating a logit model in which the dependent variable (membership status) was coded 1 if the respondent was a member and 0 otherwise. A summary of the results for those variables having a statistically significant effect is given in Table 1.

The results are presented as marginal changes in the probability that an individual is a member of KiwiSaver. The overall probability of being a KiwiSaver member is found from the weighted numbers in the sample. There were 318 KiwiSaver members out of a total of 825 respondents, implying the overall probability of being a KiwiSaver member was 38.5% (= 318*100/825).

The results in the table are interpreted as follows: the probability of those who do not expect NZS to be their main source of income being KiwiSaver members, for example, is 33% (found in the column headed “Initially”). Holding all other factors constant at their mean values, the probability of being a KiwiSaver member given the individual does expect NZS to be their main source of income is 48% (found in the column headed “After the change”). The difference between these two probabilities is therefore the marginal effect of expecting NZS to be the main source of retirement income, which in this particular case is 15% (found in the column headed “Marginal effect”). Alternatively stated, a typical individual is 15 percentage points more likely to be a KiwiSaver member if they expect NZS to be their main source of retirement income.

A legitimate question is whether or not the direction of causation could be reversed; that is, being a KiwiSaver member ”causes” the respondent to expect that New Zealand superannuation would be their main source of income. However, this seems unlikely given that, if anything, one would hope that those in KiwiSaver would no longer need to rely so heavily on NZS as their main source of income in retirement. If this were the case we would expect to see a negative association between KiwiSaver membership and reliance on NZS in contrast to the positive association shown in Table 1.

Notes:

1. Based on the entire sample: number of observations = 825.

2. The relationship with age is nonlinear; the results shown apply to a 5 year increase in age from the mean age of 40.2 years.

3. Refers to those not identified as NZ European, Maori, Asian or Pacific Island, comprising 11.4% of the sample.

4. Refers to those not classified as professionals, managers, technicians and trade workers, community and personal service workers, clerical and administrative workers, sales workers, machinery operators and drivers, or labourers, comprising 10.8% of the sample.

5. Only variables whose coefficients were statistically significant at least at the 10% level are listed in the table.

The last column of Table 1 indicates those factors that increase the likelihood of KiwiSaver membership (values bearing a + sign) or decrease the probability (indicated by a - sign). One of the most significant factors, belonging to the “other ethnicities” has a major effect, but applies to only a small share of the sample (11.4%). Likewise being classified as “other occupations” reduces the probability of being a KiwiSaver member but again this result, while statistically significant applies only to 10.8% of the sample.

Those employed part-time relative to full-time were more likely to have joined KiwiSaver, and the probability of joining increased modestly with age. Those with a partner, relative to un-partnered, and those self-employed relative to full-time employed were less likely to be KiwiSaver members.