Government plans to prise open KiwiSaver for farm and investment property purposes have met with kickback from the financial services industry.
For example, Milford KiwiSaver head, Murry Harris, argues the proposals tabled by the government last month amount to a retrograde step that contrast with the increase in contribution rates effective April 1 this year.
“… why, after such promising moves in November to improve the retirement savings of Kiwis by saving more, do we now see more ‘tinkering’ with the system with the announcement recently to allow withdrawals from KiwiSaver to buy a farm?” Harris says in a commentary.
“This piecemeal tinkering is not helpful. It undermines public confidence in KiwiSaver and its core purpose of saving for retirement.”
Rather than raiding KiwiSaver for partisan early exits, he says policymakers should focus on the regime’s “clarity of purpose” to bolster retirement savings for New Zealanders.
Harris outlines five core reforms that could future-proof KiwiSaver in lieu of outright compulsion, including:
- raising contribution rates further up to 10-12 per cent;
- ensuring contributions are on top of base income rather than lumped into ‘total remuneration’ packages;
- mandating compulsory employer contributions whether employees match payments or not;
- introducing tax incentives; and,
- establishing a cross-party political agreement on a “long-term vision” for retirement savings and pension policy in NZ.
“Importantly, this also brings many other economic benefits to the country such as well capitalised and functioning public and private capital markets, capital for badly needed infrastructure projects, and well diversified retirement savings,” he says.
The Financial Services Council (FSC) has also signalled it would fight against the proposed early withdrawal KiwiSaver options for ‘service tenancy’ workers and farm purchases.
“We have ongoing engagement with officials and stakeholders on the proposed KiwiSaver for farms policy, which the FSC opposes,” Kirk Hope, chief of the industry body, said in a newsletter last week.
“We will also continue advocating through the select committee process, outlining clearly the reasons for our opposition,” Hope said, with a formal submission expected soon.
But the industry will be dealing with a new government point-person on the issue after incumbent Commerce Minister, Scott Simpson, was booted from the role in a Cabinet reshuffle last week.
Simpson, who fronted the farm KiwiSaver plan this March replaced Andrew Bayly in the ministerial role last February. Bayly also spent just over a year as Commerce Minister, resigning following an alleged snafu with a staff member.
Cameron Brewer, National MP for Upper Harbour in Auckland, has stepped in as Commerce Minister.
The FSC “has already formally welcomed the Minister and looks forward to engaging constructively on matters that impact our sector and the consumers we serve”, Hope said.