Mixed reaction to proposal

Kiwisaver has once again become a political football through Labour's monetary policy released on Tuesday, Milford Asset Management managing director Anthony Quirk says.

It was imperative to provide certainty to individuals who were contributing to long-term retirement savings and Labour's policy did not provide that.

Instead, it provided the potential for the Government to interfere in the required level of contributions based on short-term economic conditions.

Labour finance spokesman David Parker released, as part of the monetary policy upgrade announcement, a plan to allow the Reserve Bank to ask for KiwiSaver contributions to be increased or decreased to stimulate or dampen down domestic consumption, and inflation, instead of just using interest rates.

The proposal had a mixed reaction with traditional Labour supporters, such as trade unions, not making any reaction to the announcement.

Contacted yesterday, Council of Trade Unions economist Bill Rosenberg said the CTU supported a compulsory KiwiSaver scheme and had proposed a 6% employer contribution, 2% employer contribution, topped up by 2% from the Government.

There needed to be a provision for low-paid workers - such as an increase in the minimum wage when it was brought in - and continuing government contributions when people were out of work, such as looking after dependants.

''There does need to be provision for low-paid workers, such as an exemption and/or progressive application of any increase in the employee contribution for monetary purposes,'' Dr Rosenberg said.

Mr Quirke said National had ''tinkered'' with KiwiSaver, but the general thrust of the Labour-initiated scheme, which started in 2007, had remained intact and had been incredibly successful.

There were now more than 2.3 million New Zealanders in KiwiSaver, compared with Treasury projections there would be 680,000 by mid-2014.

The Government's contributions, which helped kick-start the scheme, had decreased over time to be just 20% of total contributions to KiwiSaver in the year ending June 2013, he said.

Individuals had signalled their support for KiwiSaver and a need to save as they made up more than 50% of contributions for the same period with employer contributions providing the balance.

''The momentum in KiwiSaver is clear and will continue as long as successive governments don't make too many changes to what has become a very popular scheme.

''While the section of the community who have opted out of KiwiSaver is in the minority, Labour's policy may vindicate in those people's minds their decision not to join KiwiSaver as they do not want the State to have any influence over their savings.''

However, that seemed a forlorn hope in an election year but there was no doubt a political accord between the major parties on KiwiSaver, and superannuation policy in general - including the age for a New Zealand superannuation entitlement - would provide the greatest certainty for long-term savers and retirees, Mr Quirke said.


At a glance
• KiwiSaver becoming a political football
• More than 2.3 million members of KiwiSaver
• CTU wants protection for lower-paid workers
• Warning rents could go up under Labour Party policy 


 

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