The disappointing aspect of the Labour Monetary policy/KiwiSaver policy announced yesterday is that KiwiSaver has once again become a political football.
It is imperative to provide certainty to individuals who are contributing to long-term retirement savings and Labour’s policy yesterday does not provide this. Instead it provides the potential for the Government to interfere in the level of contributions that need to be made, based on short-term economic conditions.
While National has tinkered with KiwiSaver, the general thrust of the Labour initiated scheme which started in 2007 has remained intact and has been incredibly successful.
There are now over 2.3 million New Zealanders in KiwiSaver compared with Treasury projections that there would be 680,000 members by mid-2014.
Moreover, the Government’s contributions, which did help kick-start the Scheme, have decreased over time to be just over 20% of total contributions to KiwiSaver in the year ending June 2013. Individuals have signalled their support for KiwiSaver and a need to save as they made up over 50% of contributions for the same period with Employer contributions providing the balance.
The momentum in KiwiSaver is clear and will continue as long as successive Governments don’t make too many changes to what has become a very popular Scheme. While the section of the community who have opted-out of KiwiSaver is in the minority, Labour’s policy announced yesterday may vindicate in those people’s minds their decision not to join KiwiSaver as they do not want the State to have any influence over their savings.
It seems to be a forlorn hope in an election year but there is no doubt that a political accord between the major parties on KiwiSaver and Superannuation policy in general (including the age for an NZ Super entitlement) would provide the greatest certainty for long-term savers and retirees.