13 March 2008
KiwiSaver gets tick from first report
The first comprehensive report on KiwiSaver shows it has been a great success with the numbers joining exceeding expectations, CTU Economist Peter Conway said today.
“The report does note however that the greatest reason given for those deciding not to join is affordability, and that KiwiSaver members have higher incomes than non-members.”
“But it is also clear that women are joining in equal numbers to men and that the auto-enrolment feature with the ability to opt out is helping to join up low income workers.”
Peter Conway said that the CTU is encouraging employers of low income workers to look at the 2+2 option, where the employer puts in 2% and the worker 2%, and that meets the minimum contribution requirement. In 2010 that would rise to 3+3 and then in 2011 to 4+4.
“Given that employers can claim up to $20 employer tax credit per week from the Government from next month to reimburse them for employer contributions, it costs employers of workers on less than $52,000 a year no more to pay a 2% contribution than a 1% contribution.”
“This facility is designed to help get low income workers into the scheme.”
Peter Conway said the IRD Report aligns with union reports that workers are attracted by the kickstart payment, the Government annual top up, and the assistance for first home buyers.
Once employer contributions come into force then KiwiSaver looks even more attractive for workers, he said.