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KiwiSaver changes more work

The National Party’s proposed changes to KiwiSaver have some pros and cons for employers, consultancy firm Aventine says.

Friday, November 14th 2008, 10:09AM
The negatives are that KiwiSaver rules keep changing meaning more work for employers to comply with the scheme. The fact that there have already been changes such as to salary sacrifice, within the scheme’s first year of operation have been a contentious point.

The key proposed changes in this area are to unwind the changes Labour made to the Employment Relations Act to stop employers from reducing remuneration because of KiwiSaver.

National is also proposing to make the two-plus-two option a permanent feature. Employees will be able to choose making contributions at either two or four or eight percent.

A key issue with this change is that the resulting benefits for people putting money into KiwiSaver will be lower at retirement age than under the current scheme.

“The resulting benefits that will emerge will be lower and in many cases, inadequate.

This will increase the likelihood of future changes, or put pressure on employers to put in place supplementary arrangements,” Aventine says.

The other concern for employers is that National is proposing to limit the compulsory employer subsidy to 2%, meaning it won’t increase after April 2010. Also it plans to eliminate the employer tax credit.

Aventine says this creates problems for employers that have adopted up to now, a more generous approach.

“Under National’s policy, any employer contributions above 2% will become taxable and therefore contributions will need to be split between those that are taxable and those that are not.”

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ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
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Credit Union North 6.45 - - -
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Heartland Bank - Online - - - -
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HSBC Premier LVR > 80% - - - -
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HSBC Special - - - -
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Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
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