‘Decoupling’ employer and employee KiwiSaver payments could improve both contribution and participation rates for the retirement savings scheme, Nigel Jackson, Westpac NZ head of investments, told the annual Financial Services Council (FSC) conference last week.
Flagging the concept in a conference panel session, Jackson said maintaining employer KiwiSaver payments even if employees opt-out or are on contribution holidays would boost savings rates and potentially lift scheme membership.
The idea has emerged out of the FSC KiwiSaver Working Group, which is looking to move the dial in the four key areas of participation, contributions, access and risk (or appropriate fund choices), he said.
“No-one in government is accountable for KiwiSaver,” Jackson said. “And we want to influence the debate.”
He said the recent FSC role in successfully reversing the proposed GST on KiwiSaver (and all managed fund) fees showed the industry body can take the lead in setting policy directions.
The GST debacle may have left government gun-shy of further tinkering with KiwiSaver but Jackson said the financial services industry should push ahead with proposals to tackle well-documented issues such as low contribution rates or the gender savings gap.
Retirement Commissioner (RC), Jane Wrightson, told the FSC panel that the industry had a “limited window of time” to drive KiwiSaver policy changes before the next election cycle.
Wrightson said the RC was open to collaborating with the industry to produce a short list of policies that address core KiwiSaver questions.
“We can give government the answers,” she said.
For example, Wrightson said policies might include mandatory employer contributions for those aged over 65.
“And I would do away with total rem,” she said.
Employers are currently able to bundle up compulsory KiwiSaver contributions in total remuneration packages rather than making the mandatory payment on top of gross earnings.
Total remuneration has been criticised for enabling employers to avoid, or reduce, mandatory KiwiSaver payments while cutting the amount employees contribute to the scheme.