Financial Literacy and Retirement Planning in New Zealand

Abstract

We compare levels of financial literacy in New Zealand with levels in five other countries and between the general adult population of New Zealand, people of Māori ethnicity and, more particularly, the people of Ngāi Tahu, a Māori tribe based mainly in the South Island of New Zealand who have initiated a long-term savings scheme and are also providing financial education courses for members of their tribe.

Our findings indicate that, while the financial knowledge level of Māori people generally is lower than for non- Māori (controlling for demographic and economic factors), there is little difference between the financial knowledge of the people of Ngāi Tahu and other New Zealanders. Finally, the analysis finds financial literacy (defined as getting all three test questions correct) is not significantly associated with thinking about planning for retirement ‘a lot’, although it appears to be significant for other measures of financial achievement. This result could reflect the dominant role of New Zealand’s universal public pension in providing retirement income security.

Keywords: financial literacy, retirement planning, financial education, Maori, Ngai Tahu, New Zealand

JEL Classification: D91