Claire Matthews: Massey University banking expert says Kiwisaver election pledge doesn't go far enough

A banking expert is picking apart National's 'piecemeal' Kiwisaver election pledge, saying it doesn't go far enough. 

The party's promising to lift default worker and employer KiwiSaver contributions to six percent by 2032 - matching Australia's 12 percent superannuation rate.

Employer contributions would increase by half a percent - but not until 2029.

Massey University banking expert Claire Matthews told Ryan Bridge that there's an issue if people think the rate's too high. 

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Episode Transcript

Speaker 1 (00:00):
Nationals dropped its first election promise it wants to lift
the default key we save a rate to twelve percent
by twenty thirty two to match the Aussies. Employer contributions
were jumped to six percent, increasing by half a percent
each year, but not until twenty twenty nine. Claire Matthews
is Associate Professor, Massa University Business School. Claire, good morning, Good.

Speaker 2 (00:18):
Morning, Ryan, good thing. Well, yes and no, yes, it's
good to see key we save rates rise, but to
see it done in this way is not necessarily the
best way.

Speaker 1 (00:31):
What's wrong with this way?

Speaker 2 (00:34):
It's a little bit piecemeal. We need to actually think
about can we save it in bigger terms and think
about actually, if we're going to make some changes, how
do we want it to log And yes, one of
those changes might be to the default rate, but that
should be part of a bigger picture, not a single change.
There are other changes that need to be made which

(00:55):
came out in the Retirement Commissioner's Report on the Review
of Retirement and come last week or the week before.
There's things like total remuneration contributions for over sixty five
year olds. Those are just a couple of things, but
it's looking at it in a bigger way. And the
other issue is that if people think it's too high,

(01:16):
because you're not compelled to be a member of key
we save, but they'll just say or to continue to contribute,
they'll just say I can't afford this, I'll put it
off hold, and therefore then they're not contributing anything, which
is actually a worse situation.

Speaker 1 (01:29):
It's basically, choose your own adventure. You can choose to
be in it, it'll not be in it, and you can
choose which rate you go with. So what the total
remuneration issue has been raised with me before, so tell
me how this works. An employer will say, yeah, we
could do the at six percent rate and match your
six percent rate, or we could give you the money
now in hand.

Speaker 2 (01:50):
Basically that's how it works. Yes, so instead of putting
it into your KEII savior, they say, we'll give it
to you, and then it's your responsibility to put it
into your kiwisaver or put it somewhere else. But you're
not actually going to get it as an extra to
your salary. It's put into your salary. There's fine for
some very high earning employees are your chief executives and

(02:11):
c suite people, But it's where it gets applied to everybody.
And CEOs isn't like have a bit more power in
terms of their relationship with their employer. But some employers
do this to people who really have no power in
their relationship and they've really got no choice but to
go along with it, even though it's not in their

(02:32):
best interest or what they want.

Speaker 1 (02:34):
Does it not have the same in terms of financial outlay?
Would it be no different for the employer whether they're
paying into a KYP saver or giving them to them upfront.

Speaker 2 (02:44):
Fundamentally, it shouldn't cost any difference.

Speaker 1 (02:46):
Why would they do it?

Speaker 2 (02:49):
Because it just makes it a lot easier. Instead of
having to worry about payments going here, there and everywhere,
they just have to worry about what amount to pay?

Speaker 1 (02:56):
Gotcha? Claim Matthews, Massive University, Associate profession and Business School.
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