KiwiSaver didn’t appear out of nowhere in 2007. It was the end point of 40 years of political argument, economic missteps, market reform, and shifting public expectations about what retirement saving should look like in New Zealand.
In the mid-1970s, the Labour Government created a compulsory superannuation scheme that would have transformed national savings.
But the timing was terrible.
The financial system was still heavily controlled: fund managers were required by law to invest mostly in government bonds, offshore investing was restricted, and the domestic sharemarket was tiny and illiquid.
A compulsory savings scheme would have funnelled enormous sums into private companies through a narrow, politically vulnerable pipeline. Muldoon framed the scheme as both economically risky and ideologically intrusive - and when National won the 1975 election, he scrapped it immediately.
Many New Zealanders assume this was purely a political fight. In reality, the deeper problem was structural: the market simply wasn’t ready for compulsory superannuation. There was no regulatory framework for diversified investment, no global access, no independent (or retail) fund-management industry, and no cultural understanding of long-term investing.
Even in the early 1980s, institutional investors had very limited choice - and ordinary New Zealanders had none.
Then came the mid-1980s deregulation.
Financial markets opened almost overnight. Capital controls were removed, the dollar was floated, banks were liberalised, and companies could raise money far more easily.
Unfortunately, the transformation was so rapid that it also fuelled a speculative boom - and the infamous 1987 sharemarket crash. Many of the “companies” that collapsed were little more than paper shells.
Entire households were burned. Investors stayed away from the sharemarket for a generation, and the idea of compulsory saving became politically toxic.
Against this backdrop, several attempts to reintroduce a national savings scheme failed. Winston Peters’ 1997 compulsory superannuation referendum was overwhelmingly rejected. New Zealanders simply did not trust the system, the markets, or the politicians who proposed them.
But by the 2000s, everything had changed.
New Zealand finally had:
modern fund-managers with genuine capability,
diversified investment options,
stable regulation,
global access through PIE structures,
a growing culture of managed funds via workplace super schemes,
and a public increasingly aware that NZ Super alone would not be enough.
KiwiSaver arrived at precisely the moment the system could support it.
Launched in 2007, it was deliberately designed as a “nudge”, not a mandate. Auto-enrolment, employer contributions, a government kick-start, matching credits, and simple fund options made it easy for people to participate without recreating the political battles of the 1970s. The early years were slow, but once employers and payroll systems adapted, the behavioural momentum took hold.
Since then, KiwiSaver has grown into a national institution - but its roots reach back through decades of failed experiments, mistrust, market limitations and economic upheaval. Understanding that history matters, because it explains why KiwiSaver looks the way it does today: flexible, voluntary, globally diversified, and built on a financial system finally capable of supporting it.
Read our full white paper on the history of KiwiSaver - download it below.
