Relaxing KiwiSaver rules around first home withdrawals to include investment properties defeats the purpose of the scheme, says Financial Advice NZ.
Chief Executive Katrina Shanks was commenting on a suggestion from the three-yearly Review of Retirement Income Policies by Interim Retirement Commissioner Peter Cordtz.
“On the face of it, this sounds like a good idea, but it actually waters down fixed saving for the future, which is the big strength of KiwiSaver.
“The scheme was designed so it can’t be liquidated to be spent on things outside your retirement, apart from your own house, and Financial Advice NZ believes that’s where it should remain.
“Such a change would favour an investment property over other investment options, such as shares, whereas a financial adviser would take a myriad of factors into account when setting a personalised financial plan for a client.
“Expanding it would also involve a lot of complex rules that would be hard to administer. The simplicity of KiwiSaver is what makes it so effective.
“We do need to address the issue of declining home ownership but I don’t believe this is the way to go about it.
“Restricting KiwiSaver withdrawals to the home you live in should be as far as it goes.”