National adopts 'soft compulsion' for KiwiSaver
National unleased its first shot of the election campaign this afternoon.
As widely expected, National is promising to enrol everyone not already signed up to KiwiSaver into the scheme. People would then have the option of opting out, within a certain period of time.
The promise is hedged with caveats: the most important being that the enrolment would only happen if the government’s books were on track to return to surplus.
Apart from the administrative costs, the government would also have to pay the $1000 “kick start” for everyone who opts to stay in the scheme, as well as the maximum of $520 a year in tax credits.
“Depending on the uptake and design, officials estimate a KiwiSaver auto-enrolment could cost the government up to $550 million over four years,” Finance Minister Bill English said when announcing the policy.
This assumes 55% of those who auto-enrol - 275,000 people - stay in the scheme.
“We intend to fund this from within existing budget allowances," Mr English said.
At present there are about 1.8 million KiwiSaver members, and the savings in the scheme are projected to rise from $8 billion this year to $25 billion by 2015 and almost $60 billion in 10 years.
“These measures are pushing in the same direction households are already moving,” Mr English says. “Having spent more than $1.10 for every dollar they earned three years ago, households will this year have a positive savings rate for the first time in more than a decade.”
Labour has yet to announce its savings policy but is examining full-blown compulsory savings.
National has ruled out compulsion on the grounds people should still have the choice to save in other ways if they wish to.
Labour considered making KiwiSaver compulsory during the last government but ruled it out on two grounds: one being that the less well off would be even worse off if forced to save; and secondly because it feared a compulsory scheme would eventually be used to cut the state-funded pension.
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Comments and questions9
Why should we have to enroll in something that will cost us money if we can invest much better on our own?? i don't see sense in the compulsion idea.
...just another attempt at increasing state control and reliance in people's lives....
Theyre just trying to edge Labour into going full compulsion as a piont of difference ... by taking this stance Labout will want to differentiate themselves and National can label them as implementing another cumpulsary tax on the population
John Key should have the balls to make it compulsory for New Zealanders to save - it is the only way we are going to pay for our future - both in terms of retirement and also using the Kiwisaver funds to fund growth businesses and infrastructure.
This could be legacy policy for John Key ( by heck he needs some form of legacy policy to be a legacy Prime Minister ) or just more postering and using putty to keep the holes plugged - his choice.
Your choice John or leave to silly old Phil to do the right thing.
The major problem with savings is reserve bank policy of extremely low interest rates
Lift rates and savings will flow
liberte
Too true. I would definitely opt out having already experienced the results from allowing so called professional fund managers to play with my money. There is no accountability to the individual saver nor is there at present any guarantee that the money will actually be there when you reach retirement. It's also a great way to experience the law of diminished returns. If the government wants to encourage saving why do they not remove witholding tax on savings?
If it is compulsory then interest rates are irrelevant
Low interest rates are the best situation - lower currency and higher exports - IDEAL
Be very careful of all things being compulsory!!
Take for example ACC, it is compulsory right, we pay premiums/levies just the same as any insurance policy, we pay for the appropriate cover, but if your partner goes to make a clain on something "Govt" all of a sudden ACC is deemed a state funded benifit, then the arguments start, now how on Earth can an ACC claim be deemed a state benifit???
My wife made a claim on medical grounds, as she cannot work anymore until a knee replacement if performed, as I am an accident victim through no fault of mine, she was turned down for any benifit what so ever, because I recieve an ACC weekly compensation payment, apparently no 2 people in a partnership can receive a state funded benifit, now how can an ACC claim become a state funded benifit, when a premium/levie is paid for the approptiate insurance cover.
Be very careful on all things compulsory, it will end up coming back and kicking you in the backside.
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