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KiwiSaver: An Initial Evaluation of the Impact on Retirement Saving WP 11/04

4.5 Expected changes in standard of living

The KiwiSaver Act sets out the goal of KiwiSaver to assist members smooth their pre- and post-retirement living standards and to reduce the likelihood that individuals would experience a significant decline in their living standards once retired. In order to test this, respondents were asked whether they expected their standard of living in retirement to improve, stay the same or decline (along with a number of measures of expected and required income which are discussed further in Section 4.6 below). When asked about expected changes in living standards, respondents were not given any guidance as to “relative to what.” However, it would appear that the majority would have made the implicit comparison based on their current living standards.

A logistic regression model was estimated in which the dichotomous dependent variable was set equal to one if the respondent felt their living standards would stay the same or improve (relative to their pre-retirement state) or zero (for those who expected a decline in living standards).[12] The results are summarised in Table 7.

Factors which increased the expectation that the standard of living will improve or stay the same included: having part-time employment or being self-employed (relative to full-time employment), being willing to tolerate higher risk, and being in the labourer occupational class.

In contrast, respondents whose self-assessed health rating was less than excellent were less likely to expect their living standards to remain the same or improve. In addition, those who expected NZS to be their main source of income were less likely to expect a similar or improved standard of living in retirement.

Importantly, KiwiSaver membership was of course included in this regression as an explanatory variable. However, it was not found to be statistically significant. In other words, all else equal, KiwiSaver membership was not found to increase the likelihood of experiencing similar or improved living standards in retirement compared to those in pre-retirement.

Table 7: Factors that are associated with expecting to have a standard of living in retirement that is the same or better than pre-retirement
Variable Direction and significance
Respondent is employed part-time +++
Respondent is self-employed ++
Willing to accept higher risk +
Labourer +
Very good health --
Good health --
Fair health -
Expect NZS to be main source -


1. Only variables that were statistically significant are shown.

2. Sample restricted to those 25-years-old and over and able to specify an expected retirement age: number of observations = 564

3. +++ or --- significant at the 1% level; ++ or -- significant at the 5% level; + or- significant at the 10% level.


  • [12]The categories were: increase a lot, increase somewhat, stay the same, decrease somewhat, decrease a lot (and 3% of respondents who answered “don’t know”).
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