Subsidies hampering KiwiSaver - OECD
KiwiSaver's ability to raise overall savings and deepen capital markets is being hampered by "unfocused Government subsidies," according to the OECD Economic Survey of New Zealand.
Thursday, April 28th 2011, 11:18AM
In a wide ranging report on New Zealand, the OECD highlighted a number of reforms to KiwiSaver including changes to subsidies and the enrolment system as ways to boost the nation's savings.
"A reform to KiwiSaver that would generate higher national savings by raising Government saving is to remove subsidies, especially to high-income members who are most likely to have shifted their savings from other sources. Participation could be further expanded by broadening the automatic enrolment programme to all employees, rather than just new hires," the report said.
The OECD claimed some measures taken in the 2010-11 Budget introduced reforms to encourage greater savings and growth, but called for additional tax reform.
"Further tax reforms - either by aligning top corporate, capital and labour income tax rates at lower levels or adopting a dual income tax approach - could further stimulate growth and savings."
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