Chief financial officer for ING, Paul Butler says while the company agrees in principle with the recommendations of the Group, history and experience show that, in the long term, some form of compulsion is probably required to make people change their savings habits.
“The thrust of the report – to use the workplace as a mechanism for implementing the savings regime – is spot on. ING has always supported employer-based superannuation as the easiest and most effective way for people to save, and numerous overseas models support this.
“But as long as there is the flexibility for people to opt out, together with no tax incentives and no mandatory employer contributions, our concern is a lot of effort could be spent relative to the number of people who actually choose to participate.
“The report also highlights the need to review taxation on investments, and ING believes this is fundamental to the overall aim of improving the savings rate. In fact, to consider any new policy on superannuation without some sort of accompanying tax reform is like promoting the use of public transport without providing the requisite trains, buses and roads.”
However, current indications are any changes will not be implemented until mid 2007. ING’s view is some 'action' is required sooner.
“That aside, our initial impression of the suggested workplace savings process is that it has the potential to be straightforward and easy to administer, which should be welcomed by employers. It also addresses a number of the concerns raised by the public in relation to portability and access to funds.”
Butler says the proposal is still very broad and a lot more research, debate and work needs to take place to ensure it is the right path for the country to take. “ING will definitely take part in the submission process and our aim will be to contribute positively towards developing a scheme that works for all concerned.”
A press release from ING (NZ) Limited
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