As many as half a million more New Zealanders would be
forced into KiwiSaver under a Labour Government.
Labour released further details of its "universal" or
compulsory KiwiSaver scheme, including plans to gradually
increase contributions from bosses and workers to 4.5 per
cent of gross wages each by 2021.
Labour would enroll all working-age employees in New Zealand
who are not already members of the scheme in October next
year. A year later, their minimum contribution and their
employers', currently set at 3 per cent, would begin rising
by a quarter of a percentage point every year.
Labour leader David Cunliffe said the scheme had been "a
great success" so far, "but we need to extend it to those who
are currently missing out and increase the contribution rate
so those nest eggs grow faster".
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," said
Students, beneficiaries, the self-employed and those on very
low incomes would be exempt.
Labour's finance spokesman David Parker said employees with
non-KiwiSaver pension schemes were unlikely to be forced to
join provided their schemes were compatible.
He said the income threshold above which employees would have
to join KiwiSaver would be set through consultation with
unions and employers but it would be low. He pointed to
Australia's A$400-a-month threshold.
Finance Minister Bill English seized on that detail, pointing
out that many of those not already in the scheme simply
couldn't afford it.
"Labour's talking about pushing a whole lot of people into it
who can't save and then they make it very complicated by
creating exemptions for everybody."
Mr English said Labour's compulsory model differed from his
own auto-enrolment plan in that those who would be enrolled
but couldn't afford to save could still opt out.
He said Labour had to clarify whether its scheme was a move
away from universal NZ Superannuation.
"They're saying they're copying the Australian scheme, well
Australian scheme has a very tightly means-tested National
Mr Cunliffe said the comments were "a desperate attempt to
discredit a terrific policy".
His scheme was "absolutely" not a Trojan horse for changes to
NZ Super. "Our aim is to maintain a strong sustainable
universal superannuation system. It's also to offer
[retirees] the opportunity to have a little more than the
basic standard of living."
For those pushed into the scheme next year, their
contribution would be 1 per cent for the first two years,
rising by one percentage point in 2017, 2018 and 2019. Their
employers' contributions would begin at 3 per cent.
Mr Cunliffe acknowledged it was possible the increase in
contributions by employers would be offset against wage
- by Adam Bennett of the NZ Herald