National’s KiwiSaver Plan

National recently announced some changes to Kiwisaver which will be used to find part of their tax package. It’s pretty much what we all expected. Nerf employee contributions and reduce tax breaks from the government etc… But it’s not all bad!

They plan to reduce the minimum employee contribution from 4% to 2%. I like this change. It will enable the people who couldn’t afford to take away 4% of their salary. They also want to change the minimum employer contribution to 2% as well. I’m not totally adverse to this change, but I think the employer contribution should mirror the employee contribution from 2% to 8%.

The other change they plan to make is allowing an employer to include their contributions in the employee’s salary package. This will enable employers to basically pay employees that enter KiwiSaver less. But, they’ve said that they won’t allow employers to reduce wages if an employee joins KiwiSaver. To me, that’s the same thing… Quick example:

John and James start at a company doing the same job. John joins KiwiSaver, James opts out. James gets paid more than John but the net cost to the employer is the same as James requires no KiwiSaver contribution. 6 months later, they both get a payrise and James decides to join KiwiSaver. James is now being paid more than John for the same job

Not fair. The only way to make it fair is to leave it out of the salary package. At 2% there is very little reason not to join KiwiSaver, so if you want the employer contribution you have to join. You can’t just pocket it.

This is the usual kind of stuff we’ve come to expect from the Nats, though. Putting the power back in the hands of the already powerful and helping those with the means to help themselves.