Two of the major issues that face the UK today are the fact that people are not saving enough for retirement and that more people are being priced out of being able to buy their own homes. Failure to act on either of these issues will see things get much worse, which is why the Chancellor George Osborne has tried to implement policies to try and deal with both.
Auto enrolment which first began in 2012 sees all eligible employees of a company auto enrolled into a workplace pension. With the rollout just about halfway, it's been heralded a huge success, with just 10% choosing to opt-out when auto enrolled. This means that if this remains the case until the rollout has finished, millions more will be saving for their retirement who weren't before.
One of the schemes that George Osborne highlighted as an inspiration for auto enrolment was New Zealand's KiwiSaver. Very similar to the UK's version, KiwiSaver has now branched out and has introduced their own HomeStart grant, aimed at helping people onto the housing ladder. Will we eventually see something similar in the UK?
What is the KiwiSaver HomeStart grant?
The KiwiSaver HomeStart grant is available to people who have been contributing regularly to the KiwiSaver scheme, and people can apply to buy either old homes or new builds, with the amounts available different for each:
- 3 years of contributions - $3000 (existing/older home) / $6000 (new build)
- 4 years of contributions - $4000 (existing/older home) / $8000 (new build)
- 5 years of contributions - $5000 (existing/older home) / $10,000 (new build)
It's been a success too, with more people taking up the grants since its inception in 2011. There has been some criticism that this recent surge in applications could stoke a rise in house prices, but largely the reception to the scheme has been positive.
Could we see a similar scheme in the UK?
Nobody know, would it wouldn't be surprising if George Osborne was keeping a close eye on what is happening in New Zealand. With auto enrolment being a success so far, he wouldn't be blamed if he adopted the KiwiSaver to try and apply some of its magic to the UK housing market.