McCarten on KiwiSaver law
July 27th, 2008 at 4:34 pm by David FarrarMatt McCarten looks at the fight over the proposed law change to ban total remuneration packages from including the employer contribution to KiwiSaver:
My union, Unite, represents thousands of minimal-waged workers and few have joined despite a $1000 start-up from the Government and up to $20 a week tax credit.
That’s because someone on the minimum wage would have to contribute 48 cents an hour which they can’t afford when food and petrol prices are soaring.
And this law change will make it illegal to pay them more money if they do not go into KiwiSaver.
I think Thompson is genuinely outraged that KiwiSaver discriminates on age. Workers under 18 and over 65 don’t get the scheme’s subsidies. Mallard claims that as youth rates have been abolished and as older workers are entitled to Government superannuation that somehow makes it acceptable. Well it’s not. It’s clearly discriminatory and unfair.
So this is the head of the Unite union agreeing the the EMA Northern that the scheme dsicriminates agaianst the poor, young and old!
It is an outrage that young workers and older workers who pay their taxes are not allowed to join a scheme their colleagues can. Thompson’s view, which has some merit, is that the workers who aren’t entitled or can’t afford to join KiwiSaver don’t get the subsidy and therefore, effectively, an employer is paying some workers a higher benefit than others.
Exactly. The overall costs to the employer should be the same.
The only way the scheme would be fair was if it was compulsory for all employees so any contribution by employers would be paid to everybody.
It is becoming close to de facto compulsory and I suspect it will become compulsory at some stage.
If KiwiSaver became widespread it would inevitably lead to the weakening and abolition of universal superannuation.
KiwiSaver is privatisation of superannuation by stealth. The poor and those unable to take up employment will miss out and will end up with some state-funded pauper’s pension.
I support KiwiSaver partly because it is an effective privatisation. And McCarten is right that it will inevitably lead to a move away from the current universal publicly funded superannuation scheme. A 25 year old today will earn more money in retirement from KiwiSaver and NZ Super than they will during their working life. That is nuts, and inevitably public superannuation will be made less generous as more and more people have KiwiSaver.
I accept that the Government and trade unions don’t trust employers not to use their compulsory contribution as leverage in contract negotiations. But it seems better-off workers can receive a taxpayer subsidy as well as their employer’s subsidy while their poorer colleagues get nothing.
Indeed. Employers should be able to offer a total remuneraton package where if an employees chooses not to go into KiwiSaver, the employer can pay them extra cash.
Related posts:
- KiwiSaver and Superannuation
- KiwiSaver and tax cuts
- Michael Littlewood responds on KiwiSaver
- KiwiSaver
July 27th, 2008 at 11:09 pm
Kiwisaver should become a compulsory enforced tax rebate/saving scheme alongside national super for the blindingly obvious reason that we wont be able to afford national super as it stands in a generation or so
(especially if the cash is sucked into non-productive policies like NZ on Air funding short films about ass play and fecal matter – I kid you not and can supply the script for anyone remotely interested in seeing where your taxes go).
I digress…
I don’t believe there is any ‘stealth’ involved, however nice emotive words are always the favourite of a union official looking to drum up memberships and the left vote in election year.
Kiwisaver will be the one decent thing layboring has executed on in the past 3 years and thumbs up. Shame about everything else.
Personally I don’t think that kiwisaver “credits” or whatever you call them should be interchangeable for salary dollars for the reason that the lowest common denominator probably will always grab the cash and its that part of the distribution curve that you want to ensure has some structure in their savings for retirement. Not to parapharse Matt ‘because the man will rip off the worker’.
Vote:July 28th, 2008 at 12:12 am
And if you weren’t completely ignoring the tax credit employers get that cover their kiwisaver contributions, you might have a point. At present, under your “pay the employee not in kiwisaver the difference” policy, the employee in kiwisaver is cheaper for the employer.
A $50,000 salary employee in kiwisaver costs the employer $50,000 at present. A $50,000 salary employee, with the extra being paid directly to them, instead of to kiwisaver, costs the employer $50,500. Under the amendments currently proposed each employee will cost the employer $50,000. Do you actually want the overall costs to the employer for each employee to be the same or not?
[DPF: The tax credit should of course be taken into account when setting the total remuneration package. But this law change means the employer contribution beyond the tax credit can also not be taken into account]
Vote:July 28th, 2008 at 7:40 am
“Employers should be able to offer a total remuneraton package where if an employees chooses not to go into KiwiSaver, the employer can pay them extra cash.”
Excatly. That is exactly was the NZ Defence Force now does.
Vote: