Announcement On State Sector Retirement Savings
PSA Pleased With Govt’s Announcement On State Sector Retirement Savings
The PSA is pleased with the Government’s announcement that public servants who belong to the State Sector Retirement Savings Scheme (SSRSS) will be able to remain in the scheme after April 1 next year, or switch to KiwiSaver.
The Government is closing off the state sector scheme to new government department employees on April 1, next year.
Just over 22,000 public servants, working for government departments, belong to the SSRSS. Each receives a contribution into their retirement savings from the government equal to 1.5% to 3% of their gross base pay.
“The 22,000 public servants in the state sector scheme now know for certain that they can continue with their current retirement savings plan after April 1, or can chose to switch to Kiwisaver,” says PSA National Secretary Richard Wagstaff.
“The important thing is this group of public servants have a choice which scheme they use to save for their retirement, beyond April next year,” says Richard Wagstaff.
Staff employed by
government departments after April 1 will only be able to
KiwiSaver is also available to workers in the wider state sector.
Workers who join KiwiSaver are required to contribute 4% of their pay and in return will receive a 1% contribution from their employer from April 1 next year, increasing by 1% a year to 4% by April 1, 2011.
They also receive a $1000 kickstart from the government into their retirement savings fund and tax credits providing an annual contribution of up to $1040.
The PSA is also pleased that the Government will continue to provide government departments with the money to make their employer contributions. This will continue to apply for the state sector scheme and the same approach will apply to KiwiSaver.
This means when government departments offer staff the chance to join KiwiSaver they will carry no cost for providing the employer contribution.
“The tax credit amounts to a bonus payment for government departments and the PSA will be asking them to pass the full value onto their staff,” says Richard Wagstaff.
This would mean rather than providing a 1% employer contribution to staff who join KiwiSaver from April 1 next year, the department would provide a 2% contribution.
“We think this is fair as increasing the employer contribution to 2% is likely to cost government departments virtually nothing,” says Richard Wagstaff.