Labour restates universal KiwiSaver commitment

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 grow faster."

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 Cunliffe said.

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 increases.

- by Adam Bennett, NZ Herald

Three tea deals

Really, Dav1d? The way National puts up candidates then says vote for the other one is getting on people's gibs. Don't be so sure of outcome. What 'skeletons'?

No two ways about it.

Whether or not Kiwisaver is a success or not, I'm sorry but the meaning of compulsory would mean that no-one is exempt. It's more desperate times for a desperate party that's facing an election landslide and 3 more years crying about what National haven't done when Labour had 9 years in power to do so. I think Mr Cunliffe has a few other skeletons in his closet that were revealed today to attend to anyway.

Compulsory Kiwisaver isn't universal

For a universal system to be universal there can be no exemptions: "Students, beneficiaries, the self-employed and low income earners would be exempt".

The exempt people mentioned by Labour is not a small number.

Granted, beneficiaries are supposed to be temporary as are students, but under Labour there always seems to be a growth of voters (for them) in the beneficiary category.

The crux of the oppostion to this plan is the compulsory nature and that Labour has not asked anyone affected by this what they actually want.  Have the "tripartite" sessions then come up with a plan. So much for self-responsibilty too. 

Consequences unintended?

Sv3nn0 remarks David Cunliffe's idea of forcing more people to join, and contribute more of their income to Kiwi Saver is intended to  "take pressure off interest rates but he doesn't mention how it leaves less to pay the existing mortgage with..."
When I heard about it on the radio I first of all thought that it's not only the people on "very low incomes" that Cunliffe would excuse from this, who are struggling.  Even people with steady jobs suddenly find their hours cut, then the business closes (Hillside, mines, a great many more throughout NZ) but their costs go on.  They have a "high" standard of living - 3 good meals a day with fruit and vegetables and meat and fish, children go to school camps and participate in sports, take music lessons, the house is warm and dry, and then there's the mortgage as well.
My next thought was, according to Cunliffe it's good for even poor people to have a nest egg for when they retire.  Can't argue with that.  On the other hand, what if they have spent their working years living poor - cold homes, cheap poor quality food, dental treatment only when in extreme pain, ignoring health problems and hoping they'll go away so not getting early treatment for conditions that are serious when they have been left till urgent? Well, for the sake of the economy they'll probably die earlier than if they'd not had to endure such privation, and their children will also have had a poor start in life and probably missed school through poor health which will limit their potential. 
One could almost make a conspiracy theory out of this, were it a Tory party's policy:  weaken the poor so it's even easier to keep them too downtrodden to become an organised threat demanding a fair go. But no, this is Labour.
Thought No.3 - with even less disposable income who's going to keep businesses ticking over, or will they too fail, putting more people on short hours then out of work? [Abridged]

Letting people look after themselves

Letting people save for themselves and their families is the best way as it teaches that society expects people to look after themselves. This is a far healthier way to live autonomously and with all the money that can be saved and time we can have, especially later in life if we choose that way of doing things, it also allows us to help one another. It is because I worked and saved that I now get to help others as I have the time to do so. In a compulsory system, the fund managers would been given guaranteed money for jam and may have invested my money unwisely and lost some of it without having to account for that loss. That's not good business. It's not healthy for people's future.

Opposition

The Opposition are all parties opposed to the Government, there is more than one. National was in the same situation in 2002. If results are as dire as you predict, Labour will become 'cadre' and rebuild.

Doomed political party

This would be a very silly move if it wasn't for one obvious fact - Labour are so far behind that this can't possibly make any difference. What will happen in the future? New Zealand now effectively has no opposition party of significance. National's dominance of the polls is so complete it is getting hard to even imagine a day when they might not be in power.

We know what's good for you

Don't fix what's not broken. Mother Cunliffe is keen to pick up where Aunty Helen left off in telling us how to live. He says it will take pressure off interest rates but he doesn't mention how it leaves less to pay the existing mortgage with... 

Variable dictatorship

Labour is definitely on a communist track. They are saying "We'll decide for you how much money you're going to have, and what you're going to spend it on".

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