KiwiSaver compulsion – soft or otherwise – appears to be off the mainstream agenda in the latest political cycle with both major parties downplaying the prospect of any substantial changes to the savings regime.
Incumbent Finance Minister, Steven Joyce, told the 300-plus crowd at the joint Financial Services Council (FSC)/Workplace Savings NZ (WSNZ) conference in Auckland last week he was “not in favour of compulsion” for KiwiSaver.
“There are times in people’s lives when it’s not in their best interests to [contribute to KiwiSaver],” Joyce said.
He said those building up businesses or paying down mortgages, for instance, would be unduly restrained if forced to contribute to KiwiSaver.
“I’m in favour of KiwiSaver and superannuation – otherwise people wouldn’t get around to saving for retirement,” Joyce said. “But there should be an opt-out.”
Previously, the National government had floated the idea of a mass auto-enrolment of all employed non-KiwiSaver members to corral the apathetic constituency into the mandated savings regime – a policy receiving no airplay in this election campaign.
But if Joyce’s reluctance to compulsorise KiwiSaver is no surprise given the National Party’s historical ambivalence about the project (a creation, after all, of a Labour government), its major opposition party has also backed away from the idea.
Grant Robertson, Labour finance spokesperson, told the FSC/WSNZ audience in a separate session that it would not make KiwiSaver compulsory if in government – reversing the red party’s 2014 campaign promise.
Robertson said while it made sense to create a “universal KiwiSaver system”, getting the remaining 1 million or so eligible New Zealanders into the scheme was “a big challenge”.
But the answer was “not compulsion”, he said.
“Compulsion is not equitable or fair,” Robertson said. “We won’t rush into any decisions [about changing KiwiSaver].”
Labour’s chief electoral promises on retirement savings hinge on immediately rebooting contributions to the New Zealand Superannuation Fund (NZS) and retaining the official pension age at 65 (scheduled to rise to 67 by 2037 under current National policies).
“It’s irresponsible that the government hasn’t contributed to the NZ Super Fund since July 2009,” Robertson said. “We would begin contributions immediately.”
He said a boosted NZS would further ease the strain on projected government pension payments, which, while due to rise from the current 4.8 per cent of annual budgets to about 8 per cent over the next few decades, “relatively speaking NZ can still afford”.
Robertson said raising the pension age to 67 was also a futile exercise given life expectancy increases would likely erase any theoretical budget gains over such long time-frames.
“The other reason we oppose [raising the pension age] is that the number of exceptions would make it difficult to manage,” he said.
According to Roberston, about 30 per cent of retirees – weighted towards manual workers and Maori/Pacific Islanders – would likely need to be exempted from the 67 limit.
Overall, he said New Zealanders “want certainty” on superannuation issues.
“I’m uncomfortable with the ping-ponging nature [of retirement policies],” Robertson said.
While National and Labour may not want to fiddle with KiwiSaver settings, likely post September 23 election power-broker, NZ First, backs compulsion.
Last week the FSC published a survey of over 2,000 New Zealanders showing support, at least, for raising the minimum KiwiSaver contribution rate to 8 per cent (split equally between employer and employee) from the current 6 per cent.
“Increasing contributions was backed by backed by voters of all parties with 79% of National voters, 60% of Labour voters, 73% of NZ First and 66% of Green voters in favour,” the FSC survey says.
The FSC survey also found respondents strongly favoured:
- an automatic contribution annual increase option;
- a wider range of contribution rate choices;
- opening KiwiSaver up to the over 65s; and,
- including retirement income forecasts in member annual reports (a project already underway).
About half of those surveyed also supported decoupling the KiwiSaver fund access age from the pension age and imposing an annual reapplication process to maintain ‘contribution holidays’.