Publication Date: December 2006
Publisher: Tax Policy Center
Author(s): Eric Toder; Surachai Khitatrakun
Research Area: Economics
Keywords: Elderly; Retirement/Pensions; Tax Policy; Taxes and Social Programs
KiwiSaver is a new saving incentive program in New Zealand that requires automatic enrollment of all new employees, with an option to opt out. KiwiSaver also subsidizes participation, but its subsidies are smaller than tax subsidies for saving in qualified retirement plans in the United States. Recent research shows that using automatic enrollment as a default rule substantially increases participation in retirement saving plans, but evidence on whether saving incentives plans increase net saving is mixed. KiwiSaver is the first large-scale test of whether default rules can be more effective than financial incentives in increasing retirement saving.
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