Constant legislative changes to KiwiSaver are detracting from the original message behind the scheme of savings awareness and financial literacy.
The Association of Superannuation Funds of New Zealand (ASFONZ), which promotes workplace savings, held two forums recently, in conjunction with Inland Revenue, which involved nearly all providers of KiwiSaver schemes.
The Auckland and Wellington forums discussed issues of concern among providers to allow the smooth rollout of KiwiSaver changes and workplace savings schemes.
There was strong feedback from providers that they are now looking to the government for a period of regulatory stability for KiwiSaver.
“Constant rule changes have been costly for providers, ultimately impacting on KiwiSavers through direct costs and through the extent of resources that providers have had to commit to accommodating the changes,� ASFONZ chair David Ireland says.
He believes providers have had to meet considerable compliance costs which deliver “little or no benefit to existing KiwiSaver members�.
While Ireland believes the government should not rush further changes, he believes it does need to address concerns about some unintended consequences of changes already made, and remove anomalies from the original KiwiSaver provisions.
These include the risk of consumers losing their first home buyers’ subsidy if they reduce their member contribution from the current 4% to the 2% rate from April 1, 2009.
“Building certainty for KiwiSaver members is extremely important at present, and not only because of current investment market underperformance.
“It is also because constant rule changes since KiwiSaver was first announced have limited the industry’s ability to develop value-add enhancements for consumers,� he says.