By Lloyd Burr and Dan Satherley
All New Zealand employees will be automatically enrolled into KiwiSaver, Finance Minister Bill English announced this afternoon – provided the Government books return to surplus by 2014 or 2015.
There will also be an opt-out clause for people who don't want to be in KiwiSaver.
Currently, you are automatically enrolled into KiwiSaver by your employer when you start a new job but under Mr English’s plans, every employee, regardless of if they have opted-out previously, will be enrolled or re-enrolled in the scheme.
This soft-compulsion option will “build genuine national savings”, says Mr English.
“In the current environment, we need to be mindful of the fiscal costs of all programmes. So we will proceed with KiwiSaver auto-enrolment in the same fiscal year in which we return to surplus and start to repay debt.
"As signalled in the Budget, we believe there is merit in a one-off KiwiSaver auto-enrolment exercise, where people in the workforce not already in the scheme would be signed up with the ability to opt out.”
Mr English says the cost of auto-enrolment would be around $550 million over four years, assuming a 55 percent uptake from workers not already enrolled. The Government has ruled out a compulsory savings scheme like in Australia.
“Many New Zealanders have already opted out of KiwiSaver because they have valid reasons for not saving for retirement right now – including paying off their mortgage or being members of private savings schemes," says Mr English.
The Government estimates that within 10 years, the amount of money invested in KiwiSaver will rise from the current $8 billion to $60 billion.
A public discussion paper will be issued early next year, before the final details are finalised.
“It’s important this is done thoroughly, so we can minimise administrative and compliance costs for both employers and the Government,” says Mr English.
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