Words of caution on likely changes

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Employers would look for definite signs the economy had improved before becoming too enamoured with lifting contributions to KiwiSaver, Otago-Southland Employers Association chief executive John Scandrett said yesterday.

He was responding to an announcement from Prime Minister John Key that the Government would contribute less to KiwiSaver in the future and employers and employees would shoulder more of the responsibility.

Mr Key said the changes would only be made when the economy was again tracking positively.

Mr Scandrett said that apart from wanting to see signs of an economic improvement, employers would also seek further business support mechanisms, such as reductions in corporate tax rates, to help offset higher contributions to KiwiSaver.

"Employees will likewise be looking overall at personal tax levels and general cost of living restraints before supporting increased KiwiSaver contributions."

Employers and employees had both been served notice their respective obligations would broaden. Only when they could fully identify the shape of the then existing economic environment and associated connected elements, would there be "reaction reality", he said.

"In essence, I think most employers support the KiwiSaver concept. In most cases, where changes have to be made on either employer or employee contribution levels, the administrative issues are not hugely significant," Mr Scandrett said.

Forsyth Barr superannuation specialist Damian Foster said the big losers out of the proposed changes could be the self-employed and not employed members who did not have employer contributions going into their accounts.

Those groups would not benefit from the increase.

"An increase in employer contributions may prove unpopular particularly with small business owners," he said.

 

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