BUDGET 2012: KiwiSaver auto-enrolment pushed out to protect govt surplus
By Paul McBeth
May 24 (BusinessDesk) - The government will delay its plan to automatically enrol every worker over the age of 18 into KiwiSaver to protect its projected path back to surplus.
The plan to enrol all workers into KiwiSaver in the 2014/15 year relied on the government getting the books back in the black, and Finance Minister Bill English today said proceeding with the move would put the surplus at risk. By not going ahead with the enrolment, the government expects to save up to $514 million over four years.
"Proceeding with auto-enrolment in 2014/15 is not now possible without putting the surplus at risk," English said. "Public consultation will not be deferred until after 2012 and the policy won't be implemented until after 2014/15."
Last year, the government introduced changes to the KiwiSaver scheme, reducing tax credit subsidies, and raising the level of contributions from both employees and employers from 2013.
"The auto-enrolment exercise is relatively expensive for the government," English said. "It's a programme for when we do have sufficient surpluses."
The government will introduce new disclosure rules for fund managers from April next year to create a standard format for fund's performance. The new rules will require fund managers to report returns, fees, portfolio holdings, liquidity and liabilities, as well as any conflicts of interest.
Commerce Minister Craig Foss also announced the terms of reference for a review of KiwiSaver default providers, with any changes flagged to come in before the end of June 2014 when the existing arrangements expire.
The review will seek to examine the effectiveness of the default arrangements, and what their objectives should be.
The Ministry of Economic Development will issue a discussion document on the review later this year.