Yesterday, Prime Minister Christopher Luxon announced that, if re-elected next year, his government would gradually increase employee and employer KiwiSaver contributions to 6% each, matching Australia’s 12%.
But he has been criticised, including by University of Otago economics professor Stephen Knowles, for appearing to compare New Zealand’s superannuation scheme with Australia’s somewhat different scheme.
"It is not comparing like-with-like," Prof Knowles told the Otago Daily Times.
The prime minister’s office, however, said such a comparison was never its intention.
In a speech to National Party members yesterday, Mr Luxon announced the government’s 2026 election pledge to increase the default KiwiSaver contribution by 0.5% a year until 2032.
That would mean a combined employee and employer rate of 12%, matching Australia.
But, unlike Australia, the scheme would not be compulsory.
Also, unlike Australia, KiwiSaver contributions came from both employee and employer.
"That simply is not the same thing as in Australia where employers put in 12%," Prof Knowles said.
He was echoed by some public reaction to the announcement.
Online comments on ODT channels included "[There’s a] big difference between KiwiSaver and Australian Pvt Super ... In Australia, the employer pays that 12%".
Another said, "Luxon has no clue ... Australia’s 12% is contributed 100% entirely by employers and not a single deduction from employees".
Prof Knowles said the difference meant Australian workers would be better off financially than participating workers in New Zealand, because they would not be required to contribute 6% of their income but would still accrue 12% savings.
"But I’m sure New Zealand employers would not be too keen if they had to pay in 12%," he added.
Asked whether yesterday’s announcement was misleading, a spokeswoman for Mr Luxon said the prime minister had not claimed the two schemes were like-for-like.
"The only comparison we’re making is the fact that they have these 12% contributions and we want to match that."
Yesterday afternoon, Labour leader Chris Hipkins welcomed National’s support for KiwiSaver, a legacy of the Clark-Cullen Labour government, but said the plan to increase contributions lacked detail.
"The devil is always in the detail ... There needs to be a credible transition plan that supports people on low incomes to get into KiwiSaver and to maintain their contributions," Mr Hipkins said.
Mr Hipkins also noted the difference in contributions methods between the two schemes.
"In Australia’s case, it’s largely employer contributions, not employee contributions as well.
"That is something we need to work through.
"Without transitional support, particularly for workers on low incomes, this could hit them really hard."
