The changes National Party leader John Key is proposing for KiwiSaver have been welcomed by employer and business leaders and condemned by trade union officials.
Mr Key announced yesterday that a National-led government would make minor changes to the retirement saving schemes - but they are changes employers have been seeking since the scheme was introduced.
The changes are -
• From April 1, next year, the minimum contribution rate for employees in KiwiSaver would be 2% of gross salary. Currently, the minimum employee contribution is 4%.
• Employers would also be required to make minimum contributions of 2% of gross salary for each of their employees who were KiwiSaver members.
• From April 1, National would discontinue the employer tax credit of $1040 a year.
• The recent amendment to the Employment Relations Act that affected KiwiSaver would be repealed. Labour Minister Trevor Mallard had the amendment passed under urgency, without any debate by National, which was caught by surprise.
The amendment ruled out some arrangements which had been negotiated between employers and employees, whereby the employer made matching contributions to KiwiSaver accounts, as the scheme required, Mr Key said.
"In the interests of workplace fairness and harmony, the employer also gives an equivalent pay increment to their non-KiwiSaver employees.
"National will allow such arrangements to occur, if they are negotiated between employers and employees in good faith, and if employers are fulfilling all their obligations to make KiwiSaver contributions."
National would amend the Act to make it clear no employee could have their gross taxable pay reduced as a consequence of joining KiwiSaver, to ensure the compulsory contribution from their employer was a genuine addition to their normal pay, Mr Key said.
Otago-Southland Employers Association chief executive Duncan Simpson said there were still some compliance issues for small businesses around KiwiSaver.
But overall, the proposals had more good points than bad.
The "2+2" arrangement would make the scheme more affordable for many workers.
He did not believe employers now paying 4% contributions to their employees' KiwiSaver accounts would try to reduce them to 2% if National became the government.
"It all comes down to what has been agreed between employers and employees.
It is hard to wind back a benefit already handed out unless it is specifically worded differently to their statutory requirements."
There were several unknown elements about National's policy.
Mr Simpson could not say for sure there would not be a rush of people joining KiwiSaver now to ensure they got the 4% rather than a 2% contribution.
Council of Trade Unions economist Peter Conway said unions had supported the "2+2" arrangements as a starting point.
"But under the current scheme, this attracts the full value of member tax credits and employer tax credits."
The National Party proposal would pressure workers to pay for the employer contribution by forgoing a wage increase.
"And for those who joined expecting a 4% employer contribution, this is a major reduction."
