You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
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 Mr Cunliffe.
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 the
Australian scheme has a very tightly means-tested National Super."
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 increases.
- by Adam Bennett of the NZ Herald