Archive for the ‘Kiwisaver’ category

Kiwisaver

March 12, 2008

Kiwisaver is turning out to be very popular, and as it approaches its first birthday (since Labour expanded the scheme in its 2007 budget) it now has almost 470 000 members. However this could be the peak of its popularity as there has been a shift from new members to those automatically enrolled with starting new jobs (I might have been enrolled automatically with starting a new job). The high number of people enrolled is not surprising considering the generous subsidies given to it, including compulsory employer contributions, meaning that once the scheme is fully implemented in 2011, people will get twice at-least $2 into their account for every dollar they put in.

The increased popularity of Kiwisaver will make it unlikely that National will scrap it, or make significant changes to it (and no, if National agrees to keep Kiwisaver as is it will not be a U-turn, as they have not released any policy on this area yet). I hope that they do remove compulsory employer contributions (as this is an effective payroll tax) or provide tax cuts to business elsewhere (say reduce Company tax to 25%). As Bill English and David Farrar point out, the pension and Kiwisaver combined are very generous. If Kiwisaver remains popular, and the Super fund assets climb to $100 billion in 2023, the Super fund could be dived up into peoples Kiwisaver accounts, and Kiwisaver made compulsory, with a means tested pension remaining for those unable to save could be worth considering.