Labour says lowest income New Zealanders would be exempt from
its plan to make KiwiSaver compulsory and increased
contributions for workers and bosses would boost the scheme's
savings by about 70 per cent.
Leader David Cunliffe this morning restated his party's
commitment to "universal"or compulsory KiwiSaver.
"KiwiSaver's worked, it's been a great success, it's been a
win-win for savers and the savings sector", Mr Cunliffe told
reporters at Parliament this morning.
"It's increased our national savings and made long term
saving part of the life of some two million New Zealanders
but we need to extend it to those who are currently missing
out and increase the contribution rate so those nest eggs
A Labour Government would from October next year lift minimum
contributions to the savings scheme by a quarter of a
percentage point each year from 3 to 4.5 per cent by 2021 for
both employers and employees.
Finances spokesman David Parker said Labour's policy would
increase KiwiSaver savings by about 70 per cent.
"It's a very significant increase in national savings."
In addition, from next October, all employees not already in
the scheme would be automatically enrolled.
Labour expects auto-enrolment would bring a further half a
million people into the scheme.
"Most of those are low income earners who are missing out on
getting their fair share of government contributions", Mr
Students, beneficiaries, the self-employed and low income
earners would be exempt -- but the details of the minimum
threshold will be subject to consultation.
However Mr Parker indicated the income threshold for being
forced into the scheme would be very low, pointing to
Australia's A$400 a month threshold.
Mr Cunliffe acknowledged that "saving a few per cent will
stretch the budgets of some of our poor families and that's
why we will have an exemption for people on low incomes".
"There will be a few who in the short term are very hard up
and we'll consult on where that level should be.
"But the solution is not for people on low incomes to miss
out. The solution is better jobs and higher wage so that all
kiwis can afford to save a retirement nest egg."
He said lower paid workers would be assisted via Labour's
policies to increase the minimum wage, support the living
wage campaign and to support businesses to create more high
skilled, higher paying jobs.
Labour would retain KiwiSaver's $1000 kickstart and
government contributions of up to $521 a year.
It has previously announced it would put in place a variable
savings rate for KiwiSaver to help control inflation. The
variable savings rate would be overlaid onto the
contributions increases outlined this morning.
Mr Parker said it was unlikely the Reserve Bank would use the
variable savings rate before contributions reached 4.5 per
cent in 2021.
"During this period where we're building universal KiwiSaver
there will be less inflationary pressure in the economy
because there will be less consumption.
"Once you get to those higher rates of saving you can still
use a variable rate of savings, the exact amount of which
would be spelled out in the policy targets agreement between
the Government and RBNZ."
Mr Cunliffe said it was possible the increase in
contributions by employers would be offset against wage
- by Adam Bennett, NZ Herald