This follows the presentation of a report prepared for Finance Minister Michael Cullen by the Savings Product Working Group, which the Government is yet to formally consider.
Dr Cullen established the Working Group in May under the leadership of economist Peter Harris.
He says the Group has delivered a generic design and a how-to-guide to get workers into saving for their retirement.
“It has come up with some practical options for one of the country’s most serious long-term economic problems - our poor levels of savings. The country’s private debt levels and low savings is a weakness in our economy that is recognised internationally. I am committed to a dialogue on how we can encourage workers to save."
The Working Group’s ‘generic scheme’ proposes that all new staff are automatically enrolled in a savings scheme which they can withdraw from if they choose. There is a range of options to determine employers who would be covered and timing for employees to opt out.
Employers would deduct employee’ savings using a special tax code – in the same way that tax and payments such as ACC are deducted now. The aim of the design is to minimise compliance costs for employers. The savings would be forwarded to IRD, which would then forward the funds, through a central administrator, to a designated provider.
Dr Cullen says “the Group has delivered a practical proposal for workplace savings and has tackled a number of difficult issues with a range of alternative answers.
“I am pleased to see the Group has looked at methods to encourage workers to join a savings plan and further commit to long term savings.
Dr Cullen invites interested individuals, organisations and companies to make a submission on the Working Group’s report between now and 31 October.
“I am committed to seeing progress made on workplace savings in my 2005 budget, Dr Cullen says.
To view the full Savings Product Working Group report: www.beehive.govt.nz/Documents/Files/WorkplaceSavings.pdf
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