Employers cannot profit from workers who save

Labour Minister Trevor Mallard is concerned at a misleading advertising campaign by employers threatening to have employees’ KiwiSaver contributions deducted from their take-home pay while pocketing a government tax credit.

“Compulsory employer contribution does not mean contribution to be taken out of the employee’s take home pay,” Trevor Mallard said.

“An employee who has joined KiwiSaver has already committed 4 percent of their own money to their retirement fund and the government has decided there should be a compulsory employer contribution rising to 4% over the next four years.

“But we know some employers are trying to pay workers who have joined KiwiSaver less than workers doing the same tasks by way of “total remuneration” packages, insisting the pay package includes the employers’ 1 percent compulsory contribution to KiwiSaver.

“This means the employee is effectively taking a 1 percent pay cut, which the employer uses to pay their 1 percent compulsory KiwiSaver contribution while at the same time pocketing the $20 tax credit from the government.

“The EMA Northern is acting unethically and in bad faith.

“Far from not engaging with them, I have been in contact with them on this issue for some time, including a conference call only yesterday, and have met with Business NZ which has taken a more ethical approach to the issue.”

Trevor Mallard said the EMA Northern’s argument that workers over 65 and under 18 would be disadvantaged because they could not join KiwiSaver did not stack up. Both groups have had their incomes significantly enhanced by the Labour-led government including rises to superannuation and the super-gold card and the removal of youth rates for those aged 16 and 17.

“This is a cynical attempt by EMA Northern to paint themselves as protectors of workers’ rights when in fact they are trying to justify double-dipping into taxpayer funds,” Trevor Mallard said.

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