Kiwisaver – I want out!

I’ve become more concerned about my commitment to the Kiwisaver Scheme over the past few months. I’ve previously written on it regarding the limitation on providers available. I neglected to consider what in fact investment means and how it affects society in general.

We are told by political parties no matter what their ideologue that Kiwi’s need to prepare for their retirement. That’s true. There are even some parties considering that Kiwisaver become a compulsory scheme. The argument is that its the socially responsible thing to do – invest for your retirement. I disagree. It is wholly irresponsible to compel people to invest or to treat investment itself as somehow for the betterment of society. And I will explain my discontent below. 

Of late, I’ve been reading and watching a few documentaries on land and resource grabs. This is where foreign investors (either state or private or both collaboratively) buy up vast quantities of arable land in developing countries at dirt cheap prices and develop large scale commercial farms to export food back to wherever the investor pleases.

The theory is that the land is underutilised and who best to develop it than the rich nations that can afford to. Hold up – wtf? Underutilised? This underutilised narrative is simply a way of skipping around the fact that corporates have identified that there are land and resources available for exploitation by capital rich nations.

What’s this got to do with Kiwisaver? Well, do you know where your funds are invested? I don’t. I know how they are invested but not where….specifically. 

Because of the long term nature of retirement or superannuation investments, whichever you prefer, investments are usually made in projects that have a long term return. Denmark, for instance, invests its superannuation funds in land grabs in Africa. That’s right, the Danes super-annuitants are funded by investment schemes designed to rob local communities of their own ability to use the resources they have relied on for generations to sustain their communities. 

So why are land and resource grabs the new flavour? Global food shortage. Another manufactured crisis to legitimise corporate takeover of foreign land and resources. Casting our mind back to the food crisis of 2008 where food became a commodity subject to financial speculating  driving up prices causing some countries to hoard large quantities of food products and sanction exports such as rice which in fact created the illusion of scarcity all to make a profit. It was mostly those in the developing nations who suffered. 

Moving on, the fact that once we opt in to Kiwisaver we are compelled to continue is already hideous on so many levels. I want out. Unless the law changes, I am legally bound to allow my funds to be invested in these land and resource grabs – either directly or indirectly. If I choose to have a cash only fund (I cant recall the specific name of it), my funds sit as capital in the bank. What do banks do when they have capital? They lend. Do I have any control over who the Bank lends to? No. So indirectly, my funds sitting in a bank creates an asset that allows the Bank to make a loan to whomever it chooses even if the loan is intended to invest in one of these land grabs, that I am personally opposed to. 

I was naive, went with the group mentality and signed up for a life sentence of contributing to a system that destroys the livelihoods of other people. But at the end of the day, that was my choice – even if I didn’t fully appreciate the consequences of my choice when I signed up. In fact, I was completely financially illiterate, I’m still a novice – but even with the extremely limited understanding I have now, these unintended consequences of my actions are exactly why a compulsory Kiwisaver scheme is unjust.   So compelling a generation or future generations to do this, is abhorrent. There is no responsibility in forcing people to invest, when they cannot be sure what it is that they are investing in and whether it accords to their own values. 


Post Script: I know this is short, and there are probably many flaws, so leave a comment. I may take a while to respond due to a heavy workload but I will reply eventually. 
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7 comments

  1. The only flaw that I can see is that money has to be saved for your retirement one way or another. If you do it via kiwisaver, there is the option to search around and choose the least reprehensible option. http://www.interest.co.nz/kiwisaver/52676/loose-standards-socially-responsible-investment-space-make-tricky-choices-ethically-bent-kiwishttp://nzsuperfund.co.nz/files/Responsible%20Investment%20Policies%20October%202009.pdfIt's a lot of work, but they are there. The other being that the government either taxes and invests money and you get paid out as a pension or your pension gets funded from future taxes. Given the future tax base is likely to be smaller than it currently is, the second option could be a problem. And I'd really rather not have a government investing money on the basis that they'll probably go for highest return, damn the ethics. And as much as the increase in food prices in 2008 may have been a speculative bubble, coming food shortages are not (all) going to be manufactured. Since the 70's we've had growth in production capacity that's kept up with population growth. We're reaching the limits of what we can do agriculturally with current technology, and what we're doing isn't necessarily sustainable. Population continues to grow, production capacity is not grow at a matching pace.

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  2. http://www.morningstar.co.nz/Kiwisaver can help you identify the best Kiwisaver fund for your morals. There is a sad lack of green/sustainable growth funds but this can be remedied a) with increased demand and b) time. People are becoming more and more aware of the idea of ethical investing and basically all it takes is for someone like yourself to get a bit of capital and some intelligent employees to launch an investment programme that suits those needs. I think your reaction is a bit over the top, there's plenty of abhorrent business practices that we all engage in (directly or otherwise) on a regular basis; discouraging investment which focusses on building security for the elderly is short-sighted. Tackle the problem with the regulation of investment practices at-large rather than dissuading people from trying to secure their futures.

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  3. @Ben: Good points…just to clarify, I’m not against planning for retirement.I think it is sensible and I don’t want the burden of caring for me to fall on others. And I also accept we need to save but I personally can’t find any good reason to invest in a growth fund. In terms of options on how to deal with superannuation, again I personally would not support further taxes on my personal income, although I would support a change in the tax system where land/resource use is taxed and not personal income. And you are definitely right about the unethical investments made through government – the NZ Superfund was a clear example of not only unethical but illegal investment in the manufacture of nuclear weapons and cluster bombs, whereby the funds were (upon being found out) divested…just not entirely.

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  4. @Anonymous: Thanks! Yes! I agree with paragraph 1 of your comment. But in regards to paragraph 2 I just need to clarify that I’m not trying to dissuade people from preparing for their retirement (see above reply to @Ben) – what I am pointing out is that a government should not have further means to forcibly reduce an individual’s personal income on top of the tax the individual already pays (I am referring here to the possibility of Kiwisaver becoming compulsory and to the prohibition on opting out once you’ve opted in). In my view, this is authoritarian no matter what rhetoric its dressed in – and so I disagree that my view is over the top. I agree, “theres plenty of abhorrent business practices that we all engage (directly or indirectly) ” but in my opinion, parading the status quo to justify unethical investment doesn’t actually justify unethical investment.

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  5. So if I read this right (and I could quite easily be wrong here), you're arguing for a change in the tax system rather than necessarily against kiwisaver? I ask this based on the idea that the ability to compel people to provide for their retirement via compulsory kiwisaver investments is in essence, not particularly different from raising taxes and chucking the resultant increase in funds into some larger investment funds. Or at least, it isn't in my mind. For all that unregulated markets are horrible, unwieldy and socially broken, occasionally limited markets can have good effects – in this instance the possibility of sufficient people caring to be able to drive ethical investment funds. If I'm right about your argument being more about the need for tax reform, then I wholeheartedly agree. Though I wouldn't go so far as to suggest switching to a completely land/resource based system. A capital gains tax is definitely needed. Rather than get rid of the graduated income tax system though, I'd probably argue for it to be retained with fewer loopholes so that peoples actual income is assessed – which would hopefully increase the tax take at the higher end of the spectrum, in turn letting us remove the burden from the those at the lower end of the income spectrum.

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  6. I'm arguing against the idea of compulsory Kiwisaver and the inability to opt out of Kiwisaver. I also think that rather than focusing on investments as a means of preparing for retirement, that a change in the tax system itself could provide the answer. I think that increasing taxes at the higher end will only further divide society between rich and poor and doesnt do anything to fix the underlying culture of consumption that is driving the issues. I admit that a land tax will not solve every issue but so far, the arguments I am reading are very compelling in comparison to the arguments of high tax on productivity. I will write a post on it in the near future, but in the menatime, if you're interested check out: http://taxlandnotman.org/ and also http://www.henrygeorge.org/pcontents.htm

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