by Rob Hosking
Buried away in the back of last week’s pre election economic and fiscal update is a “new risk” for KiwiSaver.
New risks are, in Treasury terminology, decisions that have been made since the last economic update – in this case, since the Budget – which may either bring in more revenue or cost the government more money.
Treasury notes that the government is considering “changes to the KiwiSaver proposal [which] may allow members of registered superannuation schemes increased options to convert their existing superannuation scheme accounts.”
Finance Minister Michael Cullen’s office yesterday confirmed that what is being looked at is ways to make it easier for the existing schemes to become KiwiSaver schemes.
That will mean greater outlay for the government, because of the $1000 incentive everyone who joins KiwiSaver gets; and also because of the $10,000 top up for first home buyers announced by Helen Clark as part of the scheme on the weekend.
The changed is unlikely to be welcomed by existing superannuation schemes, who have already expressed strong fears KiwiSaver will mean an expensive shift of savers out of those schemes and into KiwiSaver.
All employers will have to offer KiwiSaver and the Association of Superannuation Funds has criticised the changes, saying there is a risk employers with existing scheme will simply wind up the existing ones.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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