CTU MEDIA RELEASE
23 October 2008
CTU calls on National to abandon KiwiSaver Cuts
Council of Trade Unions President Helen Kelly is calling on the National Party to abandon their KiwiSaver cuts.
An Inland Revenue Evaluation of the first year of KiwiSaver shows that 86 percent of KiwiSaver members are in paid employment, 80 percent of KiwiSaver members earn less than $50,000 a year and the proportion of wage and salary earners in KiwiSaver and earning between $20,000 and $40,000 a year is more than the proportion of the eligible population in that income band.
“This shows that KiwiSaver is of significant benefit to low income workers,” Helen Kelly said.
“National’s proposals would have a huge impact on KiwiSaver. A 2+2 formula with reduced member tax credits means that a KiwiSaver aged 30 years old and presently earning $40,000 will lose by age 65 accumulated savings of $116,438.”
“Low income workers will be worse off under National. Right now, a worker on the minimum wage has a member tax credit worth 4%, and their employer contributions are totally covered by employer tax credits. This makes it easier to get employer co-operation and harder for employers to argue workers’ contributions should come out of a lower wage increase, which is exactly what is at risk under National’s proposals.”
The Evaluation released today does include a panel survey that shows the main reason for those who did not join was the 4 percent minimum contribution.
“The CTU has always supported the 2+2 option. But we did not call for the 4% to be removed. We wanted employer tax credits to continue. We did not want member tax credits reduced.”
“National said they had an economic plan involving tax cuts and infrastructure. But their tax cuts come at the expense of KiwiSaver and their infrastructure spending also relies on directing the NZ Super Fund. This is hardly an innovative plan.”
Note: The major changes to KiwiSaver
proposed by the National Party are to remove the employer
tax credit, cap the minimum contributions at 2% for
employers and workers, reduce the member tax credits for
those earning under $52,000, remove the recent law change
preventing employers from discriminating against KiwiSavers
in terms of wage increases, and reduce the tax exempt part
of employer contributions to