Changes to KiwiSaver not helpful: Treasury
The Treasury acknowledged ahead of the Budget that changes to KiwiSaver would create “uncertainty and unpredictability which is not helpful or encouraging to individual savers.”
Wednesday, July 6th 2011, 7:18AM
The comments are included in a Treasury paper titled ‘Making KiwiSaver more cost effective', dated February 18 and released yesterday as part of a wider release of documents relating to Budget 2011.
Under the sub-heading ‘Communication', the paper noted that there had been numerous changes to KiwiSaver since its launch in 2007.
"While each has been justified according to the economic and fiscal requirements and political priorities pertaining at the time, the overall impact is one of uncertainty and unpredictability which is not helpful or encouraging to individual savers."
The paper sought approval for KiwiSaver reform proposals from the Minister of Finance Bill English and Minister of Revenue Peter Dunne.
It also reveals one proposal rejected by the Ministers was for a one-off enrolment, on July 1, 2012, "of all eligible employees who have not previously been auto-enrolled and are not already members of KiwiSaver or an approved superannuation scheme, who do not indicate in advance of the enrolment that they do not wish to be enrolled."
The paper also says that while it meets some of the recommendations set out by the Savings Working Group, other changes not implemented now are worth "further examination in slower time, notably adjustments to the number and nature of default providers with a view to reducing fees and improving the match with members' interests."
The need to carefully communicate the recommendations is also highlighted, as the paper acknowledges the changes it outlines "may reduce perceptions of the stability and predictability of the scheme."
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