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The need to increase contribution rates significantly has been widely called for.
We did a piece on the KiwiSaver changes announced in May and the commentary that touches on increases to contribution rates remains true. We note these proposed changes would be progressively implemented through to 2032 allowing for members and employers to adjust.
The article also briefly touches on the “great, but how do employers pay for it?”, which is the natural follow up question on the proposal. As well as those mechanisms covered, I have also heard calls to reduce corporate tax to compensate for increased employer contribution. Irrespective of how increases are factored in, New Zealand ultimately has to invest if it is to address the well publicised gap at retirement (and possibly alleviate the strain on NZ Super in the future).
It is worth noting – for those on total remuneration packages (a good chunk of employees) this won't be the incentive many think it is. Also the 12% quoted in headlines is gross and what ends up in KiwiSaver accounts will be less employer superannuation contribution tax (ESCT). That said, it would still be two steps forward in addressing the long term retirement outcomes of New Zealanders.
Read the article ‘KiwiSaver budget changes – how is everyone feeling about it?’ here.
