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Labour will make employer contributions to KiwiSaver compulsory, as well as raise the minimum to 6% even when employees reduce or pause their own, with the party saying it wants to make the retirement savings scheme "work harder for more New Zealanders".
It will also set the default employee rate at 4%, extend employer contributions to workers over 65, maintain contributions while parents are on parental leave, and ban new total remuneration contracts that absorb KiwiSaver contributions from employers into salaries, if elected on November 7.
Labour leader Chris Hipkins said KiwiSaver was one the party's "proudest legacies", as he announced the policy at the Sharesies office in Wellington on Sunday.
"We created it, and now we're going to make it work better for people.”
He said Labour was the party of KiwiSaver and believed every New Zealander should have the opportunity to build a secure future.
"Sir Michael Cullen turned that belief into KiwiSaver, while National voted against it," Hipkins said, adding that under National "too many New Zealanders are struggling to pay the bills, let alone save for tomorrow".
Hipkins referenced the 83,400 people who were currently on a savings suspension because times were tough, with more than a million working-age KiwiSaver members not contributing at all.
New Zealand First and National were first off the blocks with KiwiSaver policies this year, both proposing automatic enrolment at birth and compulsory contributions from employees.
Labour's finance spokesperson Barbara Edmonds said on Sunday that National was making it harder for Kiwis to save and now wanted to "force" workers to put more in.
"Labour will require employers to contribute at the same amount as National is proposing but give workers more flexibility when money is tight.
"We'll also make KiwiSaver fairer for parents, older Kiwis and broaden who benefits - working with self-employed New Zealanders on more flexible ways to build their savings in the scheme."
From July 1 in 2028, employer contributions would become compulsory and extend to paid parental leave and workers over 65. The minimum contribution rate from employers would be lifted to 6% by 2032.
Edmonds said the changes across Labour's KiwiSaver policy would be phased in carefully, "giving workers and businesses certainty".
The full policy proposal looks to:
- Make employer contributions compulsory, and lift to 6% by 2032, including when employees reduce or pause their own contributions.
- Set the employee default at 4%, remove the minimum contribution rate, and give employees more flexibility to choose their rate as circumstances change.
- Ban new total remuneration contracts that absorb employer KiwiSaver contributions into salaries.
- Extend employer contributions to workers over 65.
- Keep KiwiSaver growing for parents while they're on paid parental leave.
- Explore more flexible KiwiSaver options for self-employed New Zealanders.
Labour explained that making the employer contribution compulsory and increasing the employer contribution to 6% over time would increase revenue from the Employer Superannuation Contribution Tax.
It said that would help fund government contributions to paid parental leave recipients and meet the government's higher costs as an employer. That would be managed through the Budget process.
National ‘ankle-tapped’ Labour, says Simplicity founder
Simplicity founder Sam Stubbs said National seemed to be offering a more comprehensive KiwiSaver policy and had "ankle-tapped" Labour into making their own policy.
"I was actually sort of personally disappointed that their policy wasn't like everything that National had promised and a little bit more because, you know, KiwiSaver was invented by the Labour Party."
Stubbs said the Labour policy was a step in the right direction with compulsory contributions - but had missed the mark when it came to children.
"We should be having KiwiSaver accounts at birth and the member tax credit that people get at the moment should be redirected towards children."
The combined total amount that people could get with KiwiSaver under various scenarios would not be enough, he believed.
"Moving to compulsion is good, moving to employer-only contributions is good, getting rid of total remuneration contracts is good, but the amount that they want Kiwis to save for their future is not going to be nearly enough."
