Australian employers will soon be putting five times the amount New Zealand employers are putting into employees' superannuation savings, according to Martin Lewington, head of Mercer New Zealand.The tax and superannuation changes announced in Australia a
Australian employers will soon be putting five times the amount New Zealand employers are putting into employees' superannuation savings, according to Martin Lewington, head of Mercer New Zealand.
The tax and superannuation changes announced in Australia at the weekend mean that New Zealand will remain, and will likely fall even further, behind the Australian savings machine.
In Australia, by 2019 all employees will have 12 percent of their salary paid into their superannuation account by employers. Mercer calculates that it works out at 10.2 percent after tax based on ordinary time earnings.
In New Zealand, under Kiwisaver, employers pay the first 2 percent of salaries and no contribution tax is applied.
"We do need to bear in mind that New Zealand has been well behind Australia when it comes to retirement savings.
"But the fact remains that New Zealand's population is ageing as quickly as Australia's, and in fact the potential cost per capita of funding an ageing population in New Zealand may be greater due to our government provided pension being available to all New Zealanders no matter what their income or savings base," Mr Lewington said.
Australian policy is also more beneficial for older people who continue working.
The Australian Government will extend the superannuation guarantee to workers who are aged between 70 and 75. In New Zealand, employers can only pay into Kiwisaver until age 65, but may contribute up until five years after joining if the employee is over 65.
In Australia, employer contributions and any contributions made via salary sacrifice are taxed at 15 percent, while in New Zealand employer contributions above 2 percent or salary sacrifice member contributions are taxed at 33 percent generally.
Also, effectively those on lower incomes will pay no super contributions tax in Australia whereas in New Zealand this only applies to an employer's first 2 percent of contributions.
