Making KiwiSaver compulsory would be a good thing but it
needed to be universal, with no special exemptions to degrade
its effectiveness, Dunedin financial consultant Peter Smith
Commenting on Labour's KiwiSaver plan, Mr Smith, a principal
of Kepler Group Otago, questioned why anyone should have an
''Why should beneficiaries not be able to join KiwiSaver? The
Government could add the $521 to a beneficiary payment and
take it off them in a compulsory payment to KiwiSaver.''
Labour leader David Cunliffe announced yesterday a government
led by him would ensure all New Zealanders had a long-term
nest egg and help them grow their KiwiSaver pool by an
average of $150,000.
However, his statement then went on to say all employees aged
between 18 and 16 - with the exception of students,
beneficiaries and self-employed - would be automatically
enrolled in KiwiSaver.
The opt-out provision would be removed although there are
outs for the students, beneficiaries and the self-employed.
Labour would retain the $1000 kick-start and government
contribution up to $521 a year. Labour would also increase
the employer and employee minimum contribution rates
gradually by 0.25% a year over six years, rising from the
current 3% each to 4.5% in 2021.
Variable KiwiSaver contributions would be used as a way of
controlling inflation rather than just relying on interest
rates so people paid more into their savings rather than in
higher mortgage interest rates, Mr Cunliffe said.
Mr Smith said the policy left more questions than answers for
''The idea of variable rates will be a nightmare for
employers and the IRD.''
Instead of forcing the employers to match the contributions
up to 4.5%, an employer could build an individual's KiwiSaver
contribution into their salary, as it was done in Australia,
The most disappointing thing in Labour's release was the lack
of comment on default funds, he said.