Employers acting lawfully on KiwiSaver
Monday, April 14th, 2008
Employers acting lawfully and properly on KiwiSaver
Reported criticism of the way employers are implementing employer contributions to KiwiSaver is causing unnecessary confusion and uncertainty, says David Lowe, employment services manager for the Employer and Manufacturers Association (Northern) or EMA.
"The KiwiSaver legislation specifically allows employers to implement KiwiSaver in the way the Government is now criticizing.
"Employer contributions are specifically allowed to be included in an employee's wages as part of their total remuneration.
"Allowing employer contributions to be included in an employee's wages enables employers to address the inequity that would result for those who joined KiwiSaver getting additional workplace benefits to those who did not join", Mr Lowe says.
"That same law also provides a tax credit for both employers and employees.
"Employers are now being criticized for not handing their tax credit to employees when they have already received their own tax credit.
"The Minister of Finance said when announcing employer contributions in the 2007 Budget, 'The Government expects that the phase-in of the compulsory matching employer contributions will be taken into account in wage and salary bargaining ...'.
"Now employers are being criticized for doing exactly what the law provides for.
"Reports that the Government is considering changing its mind in the wake of union pressure is most unhelpful. KiwiSaver is difficult enough already for employers.
"What's more, let's not forget there are employers who are supporting KiwiSaver by giving all their staff a pay rise that makes the employees' 4 per cent contributions affordable for those who join the scheme, and is a pay increase for those who don't join."