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Savings scheme needs more work, more time: survey

Savings scheme needs more work, more time: survey

The success of the Government’s work place savings scheme will depend on its uptake by an enormous number of stakeholders, so getting the design of it right first time is the smart thing to strive for, the Employers & Manufacturers Association (Northern) says.

EMA has just completed a survey of employers’ views of work based savings.

“Over 80 per cent of respondents to the survey rejected the proposal by the Savings Product Working Group that employers should select a savings scheme on behalf of their employees,” said Alasdair Thompson, EMA’s chief executive.

“Employees should be offered the opportunity to save in an approved scheme that they themselves pick.

“Employees take responsibility for the bank account their wages are paid into, and they would no doubt be pleased to nominate their own savings scheme.

“Other than that, there appears to be a solid measure of acceptance by employers for the principles of the Group’s proposals.

“However the Savings Group preference for superannuation products is not favoured; two thirds of respondents want a broader range of savings schemes to be approved.

“Most responses were perhaps to be expected, though the results vary considerably from smaller to large organisations.

“In all 262 people responded to our seven questions. (www.ema.co.nz/news)

“The extra compliance required by employers to administer their employees’ savings found much less favour, unsurprisingly, with smaller enterprises. Overall, most employers appear willing to carry the extra compliance required.

“Over 68 per cent said employees should be able to opt out of any savings scheme offered, and smaller businesses are keen to be exempted, naturally, from offering a savings scheme to staff.

“People want their savings to be accessible because they ought to know best how to use their own financial resources, and when their need is greatest.

“Though a small majority of employers want savings to be accessible, 47 per cent think they should be locked in until retirement. This finding was strongest amongst medium sized organisations.

“What came as something of a surprise was just over 20 per cent of respondents would prefer savings to be mandatory, not incentivised through the tax system or in some other way. On the other hand its not surprising at all that nearly 80 per cent would prefer incentives to be introduced to encourage saving.”

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