Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


KiwiSaver at right level, but why not compulsory?

KiwiSaver hits the right level, but why is it not compulsory?

Ernst & Young Tax Director Jo Doolan says Hon Dr Cullen is to be congratulated for his KiwiSaver initiative:

- Contributions of 4 – 8% of a person’s gross salary:

- The ability to opt in or opt out, and after twelve months stopping contributions for 5 years:

- Setting your own investment profile, conservative or balanced growth:

- Government funded start up contributions of $1000 and a contribution towards fees:

- Targeted home ownership assistance: and

- Portability meaning it is yours and moves when you change jobs.

“It’s no wonder leading pension experts are hailing it as a world-leading scheme,” says Ms Doolan.

“However, I do question why it is not compulsory? And without this addition will it simply be a band-aid solution or a drop in the bucket?”

Ms Doolan says in 2004 approximately 12% of the population was retired, by 2040 this becomes 25% of the population. Add to this a longer life expectancy of 84 years and lower birth rates and by 2030 it is possible there will be two workers for each retiree.

She says movements like Grey Power are the first to point out the erosion of the existing superannuation with the age limits increasing from 60 to 65 and the payments decreasing from around 80% of the average wage to current levels of 65% of the average wage for a couple or 40% for a single person.

“Flying in the face of most developed countries, and not have a compulsory tax incentivised superannuation scheme, could seriously cripple our future.

“Singapore has the highest level of savings and home ownership in the world - achievements attributed to their introduction in 1955 of private individually owned superannuation savings that can be used to purchase a home.

“While KiwiSaver can also be used to purchase a home, the amount of assistance you get is capped at $1000 a year with a maximum of $5000. Unless the price of housing is going to fall dramatically this again has to also be in the ‘drop in the bucket’ category.

“The Australian superannuation scheme is attributed as changing Aussie attitudes to savings. Yet it was developed by accident when in 1986 the unions demanded a pay rise and the employers said “no”. The compromise was employers would pay 3% into a superannuation scheme.

“In the last 7 years Australians have doubled their superannuation savings by making contributions of $700 billion,”says Ms Doolan.

“A 2001 Treasury report considered there was insufficient evidence that tax concessions would increase national savings or if they did that the benefits would outweigh the costs. Noting the top 30% of households by income undertake 85% of financial savings.”

In 2002 New Zealanders had 36% of their assets in their own home; 27% in trusts and other real estate, 9% in businesses; 6% in Superannuation; 6% in Bank deposits, 10% in other financial assets and 6% in other assets.

Ms Doolan says there will always be a debate about the compromise of individual freedom and the administration costs of introducing a compulsory savings scheme.

“With New Zealand poised to match Australia in making the great white sharks an endangered species, without introducing some form of compulsory retirement savings well paid superannuates are likely to be New Zealand’s largest number of endangered species.

“The Cullen fund, KiwiSaver and private work-based savings proposals are baby steps that should be celebrated but what is needed has to be much more than this.”


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Onetai Station: Overseas Investment Office Puts Ceol & Muir On Notice

The Overseas Investment Office (OIO) has issued a formal warning to Ceol & Muir and its owners, Argentinian brothers Rafael and Federico Grozovsky, for failing to provide complete and accurate information when they applied to buy Onetai Station in 2013. More>>

ALSO:

Tomorrow, The UN: Feds President Takes Reins At World Farming Body

Federated Farmers president Dr William Rolleston has been appointed acting president of the World Farmers’ Organisation (WFO) at a meeting in Geneva overnight. More>>

ALSO:

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news