New Zealand's retirement system was ranked as a B in a new report, while Australia received a B+. File photo. Photo: 123RF
New Zealand's retirement system - made up of mostly of KiwiSaver and NZ Super - had been ranked 14th out of 48 around the world.
The ranking, by Mercer, looked at schemes' adequacy, sustainability and integrity. It ranked New Zealand a B overall.
Australia received a B+.
The New Zealand system scored more poorly on adequacy - which covers the income people receive in retirement - slipping from 25th to 28th place or a C+ by that measure.
The Netherlands took the top spot, ahead of Iceland and Denmark.
Mercer NZ consumer wealth leader Sarah Whitelock said that highlighted the need to improve New Zealanders' confidence and participation in KiwiSaver.
"KiwiSaver is the fastest growing invested asset in the country, having surpassed $100 billion. As the KiwiSaver system matures, and we are starting to see the benefits play out for retirees through a supplemented retirement income, we now need to ensure that savers of all ages understand the importance of retirement planning and decumulation strategies," Whitelock said.
"The success of a long-term savings plan will be boosted by additional contributions from employers and the government, and these should be underpinned by an overall enhancement in the importance of KiwiSaver as part of a financial plan."
Whitelock said the Netherlands had a similar universal pension and other savings and investment schemes alongside it that were generally industry-based.
"But they have much higher combined contribution rates, that's sitting at 12 percent."
She said lifting KiwiSaver contribution rates would improve the country's standing in the index, as well as increasing the amount of assets that New Zealanders had for retirement.
"We think that combined contribution rate should be heading up to more like 10 percent, at the moment it's sitting at 6 percent or so."
She said the countries that performed well in the rankings were also those that not only looked at accumulation of a pension asset but how it was accessed once people retirement.
That might mean offering people the ability to sign up for an ongoing stream of income, for example, rather than lump sum withdrawals from KiwiSaver.
"Average KiwiSaver balances are still sitting around lower amounts but as KiwiSaver gets bigger we need to start requiring more in terms of giving people ways to decumulate."
She said NZ Super helped New Zealand's place in the rankings.
It is often described as one of the more generous in the world because it is available to almost all New Zealanders.
But if that did not continue, it could make New Zealand's system less internationally competitive.
"There is a lot of discussion from time to time about the future of NZ Super. I think there is no simple answer to that," Whitelock said.
"Flexibilty is important and with an ageing population and increasing life expectancy we should be encouraging people to work longer but not requiring it."
She said any changes to NZ Super would need to be "very well researched and understood". "It would have very important implications."
She said that was something that affected the country's rating on the sustainability ranking. New Zealand ranks a C+ for sustainability.
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