KiwiSaver v Parliamentary Super

May 13th, 2011 at 7:50 am by David Farrar

Vernon Small reports in Stuff:

MPs’ generous schemes will not be cut, despite Government plans to slash the subsidies paid to accounts. …

Since 1992, MPs have been entitled to a subsidy of up to 20 per cent of their salary, receiving $2.50 for every dollar they put in. Those elected before 1992 receive a subsidy equal to 23 per cent of their gross salary.

Asked why taxpayers should subsidise MPs up to 20 per cent when he was winding back KiwiSaver subsidies, Mr English said they were different schemes.

“The MPs’ scheme has been wound down over the last 20 years to something that is pretty similar to what everyone has available to them. In fact, I think a number of MPs are probably members of KiwiSaver.”

There is a vital fact missing from this article. The Remuneration Authority operates on a “total remuneration” basis and the value of that 20% superannuation subsidy is effectively deducted from their salary. If the subsidy increases 5%, then their salary drops around 5%. If the subsidy is decreased, then the salary increases.

Personally I would just pay MPs the full remuneration for their jobs (which would see their pay increase 20%) and leave it up to them to decide whether they put some of it into a savings scheme or not.

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19 Responses to “KiwiSaver v Parliamentary Super”

  1. Graeme Edgeler (3,262 comments) says:

    In this case, I don’t believe that information is necessary.

    The Government is proposing to cut the takehome pay of kiwisaver members in order to shore up their retirement savings, saving itself money.

    The Government is not proposing to cut the takehome pay of parliamentary retirement savers to shore up those retirement savings and save itself money.

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  2. flipper (3,524 comments) says:

    Quite agree DPF.
    The Dom Post is generally bullshit and its writers poor quality.
    As for the Editor….previous Eds must be turning in their graves or weeping.

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  3. big bruv (13,198 comments) says:

    What a surprise!, Once again double Dipton thinks that the recession does not apply to him or his mates in the house.

    What a bunch of self serving hypocrites these bastards are.

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  4. Brian Smaller (3,981 comments) says:

    It is a bad look. There should be no subsidy beyond what is available under any national scheme. It needs to be scrapped.

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  5. magic bullet (776 comments) says:

    DPF

    ” If the subsidy increases 5%, then their salary drops around 5%. If the subsidy is decreased, then the salary increases.”

    Ah yes, but isn’t the MP’s super an scheme just a way of hiding part of the “total remuneration” from the public? That’s sure what it looks like to me. So i wouldn’t call your post anything more than a defence based on accounting semantics .

    Also – English goes on about Kiwisaver being nearly as good as the MP SA scheme. But he neglects to mention that his government intends to remove the real incentives to sign up to kiwi-saver – the govt and employer contributions. So once again double-dipton’s arse is covered, but what about those of us that have to work hard for a small wage? Will our media pick up on this? I doubt it.

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  6. scrubone (3,044 comments) says:

    It’s playing on the confusion between a government retirement savings scheme and a scheme for the retirement of government members.

    What should be of more concern is that employers are unwilling to pick up where the government cuts back.

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  7. Spam (593 comments) says:

    But he neglects to mention that his government intends to remove the real incentives to sign up to kiwi-saver – the govt and employer contributions.

    Wrong. Employer contributions will be increased.

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  8. virtualmark (1,468 comments) says:

    The principled position would be for the budget to announce that the MP’s superannuation scheme is being shut down and that all MPs will have the opportunity to take up Kiwisaver on the same terms as every other New Zealander.

    Yes DPF, the Remuneration Authority might then adjust their base salary to reflect the different conditions.

    But I cannot see how the Nats can sell adverse changes to Kiwisaver when they preserve their own separate scheme untouched. And I would have thought there’s a big political win if the Nats front-foot this and say “Now that Kiwisaver is pervasive and well established we think it’s only proper that MPs move to Kiwisaver too”.

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  9. KH (687 comments) says:

    I have no problem with the MP’s contributing from salary and having employer subsidy at 10%, 20% or 50% or whatever. As long as it is transparent and known and we can evaluate what the total remuneration package is.
    What the total package is – is another matter to debate separately.
    Compulsory. Yes. As it should be for all of us.
    What I do have a problem with is the various trailing benefits such as lifetime 10% airfares. Murky. It’s just madness. What irresponsible, indeed venial person, cooked that up?

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  10. m@tt (587 comments) says:

    Sorry but that is just playing with semantics.
    Can they choose to opt out of the super scheme and receive the same amount in cash? If not, which they can’t, then it’s an add-on to their base package, end of story.
    A politicians sense of entitlement is the one thing that never changes.

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  11. PaulL (5,871 comments) says:

    DPF, you’re right. Shut it down, and increase their pay. In fact, shut down all the perks and lurks, and increase their base pay. So much easier to deal with. Of course, what people will then notice is that their base pay is actually quite high, despite protestations to the contrary. Politicians kind of like the fact that their headline pay is a lot lower than their real pay. Newspaper articles like this are the price that politicians pay for that obscurity.

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  12. magic bullet (776 comments) says:

    Spam – that’s a good name for you.

    The thing is there was a loophole in the original Kiwisaver scheme that allowed employers to deduct the employer share of Kiwisaver from the worker’s pay-packet. Which means any employer that didn’t want to pay would simply push the cost onto the worker involved.

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  13. Grendel (949 comments) says:

    lets also not forget the SSRSS and GSF which, though both are now closed to new members provide a 3/3 contribution match for members.

    This money also comes from the government, but i cannot see the MSM running an article about kiwisaver being cut but government workers still get their generous scheme.

    while i have a large vested interest in Kiwisaver i am pragmatic that the economy is not in the position that borrowing for savings makes any sense. i will wait until the budget actually announces what the changes will be, and then will provide that info and advice on what to do to my clients.

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  14. Manolo (13,297 comments) says:

    Double Dipton English invariably fucks up every time he open his mouth. Yes, the same man in charge of the NZ economy!

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  15. Grendel (949 comments) says:

    no bullett thats a lie.

    what labour did was not allow people to count Kiwisaver as part of your salary package.

    what this meant was that if you were on 50K, and your mate was on 50K plus kiwisaver at 2% (so 51K) you could get 51K salary instead as the total package was the same. employers then said that if you decided to then take up kiwisaver your salary would reduce to keep your total package the same. labour decided they did not like this and canned, meaning you could not count KS as part of a total package deal.

    National thankfully repealed that. I have seen plenty of contracts now that have a salary with and without kiwisaver to equal the same amount total package.

    and its beneficial to the employee to have the employer contribution to Kiwisaver, as its not taxed. so if they earned $1000, they would have $670 or so to put into personal savings. that $1000 from their employer to Kiwisaver stays at $1000.

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  16. georgebolwing (602 comments) says:

    My initial reaction to hearing this on the radio this morning was to swear loudly at the continued stupidity of our main-stream media.

    Their ability to turn any story into an attack on the terms and conditions of politicians never ceases to amaze.

    As I have said before, I consider that our politicians are, as a class, grossly under-paid for the job they are asked to do. And it shows: as a class, our MPs tend to be people who are earning more in Parliament than they could earn outside Parliament. There is the odd exception, like John Key, but you pay peanuts and you get monkies.

    I also think that it is in the public interest to have a high retirement element within the overall remuneration of MPs. I see too many example of people hanging on in Parliament well passed their use-by dates. In some cases, I am sure that this is because the MPs in question are not prepared to take the heavy reduction in life-style that removal of their parliamentary salary would entail.

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  17. magic bullet (776 comments) says:

    Grendel:

    oh – so employees that take up kiwisaver can expect to receive a few more dollars every week from an effective 1% decrease in income tax? That’s what we’re talking here. That’s not going to lead to significantly higher levels of saving. National is planning on defeating the whole purpose of the scheme. They just don’t want to take the scheme away in name, because they know it’s very popular. However, people aren’t so stupid that they won’t notice the thousands of dollars National is retracting from them though. This will hurt National.

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  18. KH (687 comments) says:

    I believe that eventually Kiwisaver will be compulsory. In that situation it’s reasonably irrelevant if the ingoing is called an employers contribution or an employees contribution. It will be seen as a part of your total salary package.
    I don’t believe that the Government contribution will last many more years. And why should it.
    I employ a reasonable number of people and I also pay myself mostly via Salary and PAYE. I love the Employer contribution because it is tax deductible and getting 2% out of the company tax free is a delight.
    The set up of Kiwisaver with money in peoples own accounts, rather than a slush fund, means people see it as their own money. And was a wise move because as those nest eggs grow in total, any Government who messes with it is in big strife. A constituency is building here, as we see from this weeks reaction to John Keys speech.

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  19. bchapman (649 comments) says:

    PaulL at 9.30- that would be too transparent.

    “..the superannuation subsidy is effectively deducted from their salary”.

    Sounds like trying to obscure your real income doesn’t it. What tax do they pay on the subsidy?

    And they have the cheek to get stuck into WFF recipeints doing the same thing. Talk about hypocracy!

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