KiwiSaver

Revenue Minister Peter Dunne has re-emphasized employers’ obligations under the KiwiSaver superannuation scheme, following concern expressed in a letter to the editor in today’s DominionPost.
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In the letter, the writer says he is a job seeker who was told by a reputable retailer that KiwiSaver is a voluntary scheme but the company’s staff had no spare energy to administer it and recommended the job seeker consider starting his own retirement scheme.

Dunne said, “If the facts are as outlined, then that’s not good enough.

“Employers are required to automatically enrol new employees, make deductions from their first pay day and forward those on to Inland Revenue along with PAYE, child support deductions etc.

“The employer must provide a new employee with a KiwiSaver information pack within 7 days of starting employment.

“Employers must also provide information packs to existing employees who request one. If the employee wants to opt-in to KiwiSaver the employer must start making deductions as above.”

Government will pump an estimated $3 to 4.5 billion a year into KiwiSaver members’ accounts, which is effectively a tax cut reserved only for those who can afford to take it up.
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The chief executive of the Northern Employers & Manufacturers Association Alasdair Thompson says taxpayers who cannot afford to save in the scheme, and those ineligible like those 65 or older, will be contributing towards its costs.

“Strangely no commentators have bothered to cost the scheme’s impact on Government’s accounts, Thompson said.

“If only half the eligible workforce join KiwiSaver the cost will ultimately represent $3 to $4.5 billion charge each year against Government’s accounts.

“On top of this are the costs of employing another 1200 public servants to administer the scheme, which runs into hundreds of millions of dollars.

“KiwiSaver could have been delivered far more efficiently.

We said Cullen could give personal tax cuts without inflation by directing tax cuts go into KiwiSaver (28/1/2007).

“Every income earner could have been automatically signed into the scheme.

“Instead the Government chose to launch an administration heavy money-go-round, and denied access to older people, those at work under 18 years and, in effect, low income people.

“The $1000 per person kick start will cost around $1.5 billion, and the Government’s tax credit per person of $1040 will add another $1.5 billion or more, each year.

“The compulsory contribution from business could also reduce business taxable earnings on top of the cost of the tax rebates to businesses. These will add another $1.5 billion.

“No wonder so many fund providers are scrambling to register for KiwiSaver with all those fees at stake!

“The huge costs also raise other questions, such as what will happen to taxation adjustments in future.

“And how do the costs of KiwiSaver affect the National Party’s position on tax cuts, and the ultimate reform of KiwiSaver, should they lead the next government.”

The government will remedy a technical problem in the KiwiSaver legislation to ensure the smooth introduction of the new member tax credit, Finance Minister Michael Cullen and Revenue Minister Peter Dunne announced today.
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As announced in Budget 2007, people who join KiwiSaver will be entitled to a tax credit that matches their contributions up to $20 a week from when they become a member. That will be paid directly into their accounts annually, they said.

As it is worded, the legislation does not reflect this policy intent, with the result that some savers would not become eligible for the tax credit until several weeks after they began making contributions. That is not how the legislation was intended to work.

Therefore we will be introducing a law change ensuring that savers will be eligible for the member tax credit from the date they begin making contributions.

The member tax credit will apply from the first of the month in which the contribution is made. This means, for example, that all contributions that begin in July will be matched by a tax credit from 1 July; those that begin at any point in August will count as having begun on 1 August, and so on.

The change will be added to the taxation bill that is currently before Parliament by means of a Supplementary Order Paper to be released within the next few weeks, the Ministers said.

KiwiSaver starting today discriminates against people aged 65 and over, the Employers & Manufacturers Association (Northern) says.
Press Release

“This is from the government that sensibly passed the law removing a retirement age from all employment agreements and reinforced the illegal nature of any discrimination against older people,” said Alasdair Thompson, EMA’s chief executive.

“By making people 65 or over ineligible for KiwiSaver, Government is denying them access to the $1000 tax funded kick start, a $1040 annual tax credit, and tax free employer contributions.

“This is serious discrimination against equal opportunities for older people and it must be remedied with urgency.

“Besides being grossly unfair, it is incredibly short sighted.

“People these days are living and working much longer, and with today’s tight labour market employers are keen to keep them on long after they reach 65.

“The discrimination gives older people no encouragement to keep working though valued for their experience and ability to train younger staff.

“It’s a particularly serious concern for employers having trouble growing their businesses due to an inability to get staff.

“KiwiSaver’s age discrimination is taking us in the opposite direction from Australia. Across the Tasman from today, their Better Super scheme will see older people in work paying extremely low tax rates by offsetting tax free income from their superannuation savings. This is specifically aimed at keeping them in the workforce.

“Most seriously for the government, KiwiSaver seems to us clearly in breach of the Human Rights Act, the Bill of Rights, and the Employment Relations Act 2000.

“Section 21(i) of the Human Rights Act states plainly no one can discriminate on the basis of age. Section 22 (1) (d) notes it is illegal to discriminate against age for the purposes of retirement.

“Section 105 (1) (i) of the Employment Relations Act states that ‘age’ discrimination is grounds for an individual to bring a personal grievance claim against their employer.
“Why should Government rule itself above these laws?”