John MacDonald: We need to go further with Kiwisaver

I’m with the KiwiSaver providers who are saying we need to go further than just increasing contributions and we need to make them compulsory.

This is after the announcement by the National Party yesterday that one of its election policies next year will be increasing contributions to 12 percent (6 percent from employers and 6 percent from employees) by 2032, to bring us into line with Australia.

KiwiSaver providers are saying today that they’re liking the policy - but the calls are already coming for it to be made compulsory.

Across the Tasman, it’s compulsory for employers to contribute - but not for workers.

National says it’s not in favour of making any contributions compulsory. NZ First is, though.

So does Sam Stubbs, who is managing director of Simplicity.

He’s saying that it has to be compulsory because we have to make sure everybody is saving for their retirement while they're working. And the only way to do that is to make it compulsory. Who can argue with that?

He says: "Those people who aren't saving into KiwiSaver are going to be much worse off later on in life. So if we want to remove inequality in New Zealand, and we don't like inequality in New Zealand, we have to make sure that everybody is saving for their retirement while they're earning.”

Compulsory KiwiSaver contributions are also going to be essential with any changes to the contribution rates, as National is proposing. Because some people who are paying three percent now won‘t want to pay six percent and so they’ll pull out.

And the only way to stop that, is to make it compulsory.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from Newstalk ZB.

Speaker 2 (00:12):
Got to tell you I'm with the Kiwi Saber providers
who are saying today that we need to go further
than just increasing contributions and we need to make keev
saber compulsory. I'm with them. This is after the announcement
by the National Party is today that one of its
election policies next year will be increasing contributions to twelve percent,

(00:34):
so six percent from employers six percent from employees. This
all happened by twenty thirty two and it will bring
us into line with Australia, so within six years it
would be done incrementally, while by twenty thirty two the
new contributions would be fully in placed. This is National's policy.
The kei We Saber providers are saying today that they're

(00:57):
liking the policy, but the calls are already coming for
it to be made compulsory. Now across the Tasman it's
compulsory for employers to contribute, but not for workers, and
Nashville says it's not in favor of making any key
we saver contributions compulsory. New Zealand First is though Winston Peters,

(01:18):
he has said previously that New Zealand First wants to
see contributions increase to eight percent and eventually ten percent,
and he wants them made compulsory. So does Sam Stubbs,
who is managing director of the Simplicity Kiwi Saver outfit,
and he's saying today it has to be compulsory. He's
making such sense. Has to be compulsory because we have

(01:40):
to make sure everybody is saving for their retirement while
they're working. And the only way to do that is
to make it compulsory. And who can argue with that?
Not me, he says, quote those people who aren't saving
and a Kiwi Saver are going to be much worse
off later in life. And so if we want to
remove inequality in New Zealand, and we don't like inequality

(02:02):
in New Zealand, we have to make sure that everybody
is saving for their retire ronment while they're earning. Of course,
Maurray Harris for MILF that Asset Management, was talking to
Mic earlier. Here's the problem, he says, this policy is
trying to address.

Speaker 3 (02:21):
kV Saber has been hugely successful. There's three point three
million kivs in it and one hundred and twenty billion saved.
But for the eighteen years it's been operating, the issue
that we've had is contribution rates have been far too low,
So New Zealanders are not going to enjoy the retirements
that they dream of.

Speaker 2 (02:37):
So Mara Harris from Milfed Asset Management, he's giving the
tick for us being made to put more into our
Kivsaver under this national policy. He says, Nationals make it
a good start, but there's more to it.

Speaker 3 (02:48):
Fundamentally, this is a good announcement, but there's a lot
of other moving parts with Kivsaver, and I think what
we need to see is what's the long term strategic
plan for KIV Saver and what are the settings that
are going to be set for the long term future.
Because at the moment you do have this thing called
total compensation where your employer can pay you out of
your pay the employer contribution. Now that should be scrapped.

(03:10):
That's another one of the settings that National haven't announced
or included in this announcement, And there are others as well.

Speaker 2 (03:17):
And he's right there, right because you imagine if an
employer is taking their six percent contribution out of someone's
pay as well as the employees six percent. That's twelve
percent gone from each paypacket. So that needs to be
sought absolutely. As for making keep you say, a compulsory,
I think it needs to be. It's a no brainer.
That's going to be essential, especially with any changes to

(03:39):
the contribution rates as National is proposing, because some people
who are paying three percent now might not want to
pay six percent, so they'll pull out. And the only
way to stop that happening, will prevent that happening is
to make it compulsory. And yes, you would get people saying, oh,
it's outrageous and they should be free to decide and
that they can't afford six percent or all of that,

(04:01):
But these very same people would be the ones winging
when retirement comes around and complaining that they don't have
enough to retire on. So of course we have to
stop hoping people put money into the akiwisaver and we
have to make them do it. Make it compulsory.

Speaker 1 (04:19):
For more from Category Mornings with John McDonald, listen live
to news Talks a'd be Christchurch from nine am weekdays,
or follow the podcast on iHeartRadio