More incentives for KiwiSaver possible: Cullen
Finance Minister Michael Cullen says more incentives are possible to encourage private sector employees to join the KiwiSaver workplace savings scheme.
Tuesday, June 21st 2005, 9:04AM
by Rob Hosking
All employers have to provide access to the scheme, and all employees are automatically enrolled when they change jobs, although they may opt out after several weeks.
There is a $1000 government grant if they stay enrolled; and some of the accumulated savings can be used for a deposit on a first home. There are no tax incentives and no direct assistance to employers.
Cullen told MPs the government is taking a “suck it and see” approach and there may be a need for other incentives later on.
“I would not want to over-emphasise the incentive aspect of it to get people in,” he told Parliament’s finance and expenditure select committee last week.
The government would evaluate the uptake of the scheme and decide whether further incentives are needed, he says. KiwiSaver is not due to start until April 2007.
Negotiations with providers are not due to start until late this year. Officials have toyed with providing further assistance to employers to encourage them to provide “top ups” for employees who join the scheme.
Offshore, there has been little enthusiasm for workplace saving schemes that do not have some additional payment from the employer.
In New Zealand, the government’s recently initiated State Sector Retirement Savings Scheme attracted around half of those eligible, and research has shown the employer contribution was viewed as a pay rise by employees, and the main drawcard for those joining.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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