KiwiSaver

Revenue Minister Peter Dunne says that KiwiSaver should be turned into a compulsory savings scheme once the majority of workers have signed up to it.
He says it’s a short step from where it is now to the “conclusion that the logical next move is to make KiwiSaver compulsory.

Dunne says the strong public support shown for KiwiSaver in the four months since its launch on 1 July shows it is already a winner with the New Zealand public and will be here to stay.

“It’s quickly become iconic – like New Zealand Superannuation – and the reality is no future government will dare pare it back, for fear of the political consequences of playing around with people’s savings.

“Making KiwiSaver compulsory would not only be the best way of future proofing the scheme against political interference, but also of making a positive contribution to boosting long-term savings and investment, and ultimately the standard of living of all New Zealanders,” he says.

Dunne says one of the advantages of making it compulsory is that it would remove the employer compliance costs associated with people opting out.

“Past attempts at having a compulsory government superannuation scheme have failed, in my view, because they took a top-down approach, with governments telling people they had to join.

He says people are choosing to join KiwiSaver because they want to, “which is a very different matter.”

Dunne says these are his personal views, and are not reflective of government policy “at this stage.”

“However, I do not think this issue will be able to be ignored if Kiwisaver continues to be so successful.”

In the first three months of KiwiSaver the enrolment figures have already broken through the 200,000 mark, Finance Minister Michael Cullen and Revenue Minister Peter Dunne said today.
Press Release

As of 5 October, the total number of KiwiSaver enrolments processed by Inland Revenue had reached 212,794. This is a 64% increase in enrolments since the end of August.

“Hundreds of thousands of New Zealanders are now finding it easier to save for their retirement by joining KiwiSaver,” the Ministers said.

“Members who joined in July already have their retirement savings working for them – last week the first contributions were transferred to KiwiSaver scheme providers. Over $41 million is forecast to go to providers in October, of which $32 million will be government contributions that include the $1,000 kick-start and half the $40 annual fee subsidy.”

The Ministers provided a breakdown of the 212,794 enrolment figure:

• 101,748 people actively chose a provider and went directly to a scheme to enrol
• 67,028 people actively chose to join KiwiSaver and enrolled via their employer
• 44,018 new employees were automatically enrolled by their employer.

These figures are net of 21,113 opt-outs also received.

Demographic data indicates that while the KiwiSaver enrolment rate increases as people near 65 years of age, almost half (49%) of people joining KiwiSaver are younger than 45. Members under 20 years of age are 8.6% of the total.

“Many parents clearly wish to give their kids a head-start and view KiwiSaver as important for their children’s future. It is also great to see a lot of younger people entering the workforce are getting into the saving habit early,” the Ministers said.

Other demographic data released by the Ministers showed that KiwiSaver enrolment figures by gender were generally even, with 52% female and 48% male.

“KiwiSaver is off to a very good start, and it is encouraging that so many people have decided joining KiwiSaver is the right choice for them. The latest enrolment numbers reinforce that KiwiSaver is a simple and appealing way to save for retirement for a broad range of New Zealanders.”

KiwiSaver schemes will be required to disclose their approach to responsible investment from 1 April 2008 under legislative proposals released today by Finance Minister Michael Cullen and Revenue Minister Peter Dunne.
Press Release

KiwiSaver schemes will be required to disclose their approach to responsible investment from 1 April 2008 under legislative proposals released today by Finance Minister Michael Cullen and Revenue Minister Peter Dunne.

The proposals have been designed to enable New Zealanders enrolled in KiwiSaver to have full confidence in the environmental and social credentials of the investments made on their behalf by KiwiSaver and KiwiSaver complying schemes.

“Growing numbers of shareholders worldwide want to ensure that their investments do not support activities or practices they do not approve of,” the Ministers said. “Many are also taking that a step further and want their investments to support activities and practices they do approve of.

“KiwiSaver providers will have to disclose in their investment statements whether their investment policies and procedures take into account responsible investment criteria – including environmental, social and governance considerations.

“If they do, they must tell members where they can obtain further information on the extent to which they take responsible investment into account. This will also allow funds with responsible investment policies to market their credentials.

“The Securities Commission will provide guidance notes for funds over the next few months,” the Ministers said.

The changes were outlined in Budget 2007 and it is proposed that they will be included in the taxation bill currently before Parliament by means of a supplementary order paper that amends the KiwiSaver Act.

The latest enrolment numbers for KiwiSaver confirm that the work-based saving scheme is off to a strong start, Finance Minister Michael Cullen and Revenue Minister Peter Dunne say.Total enrolments received by Inland Revenue had reached 129,591, with 5,900 opt-outs also received.

“It is encouraging to see that just two months since the launch of the scheme, almost 130,000 people are already saving for a better standard of living in retirement through KiwiSaver,” the ministers said.

The ministers provided details of how that 129,591 enrolment figure can be broken down:

• 61,061 people who have actively chosen a provider and gone directly to a scheme to enrol

• 51,139 people who have actively chosen to join KiwiSaver and enrolled via their employer
• 17,391 new employees who have been automatically enrolled by their employer.

The ministers noted that the figures include numbers of employees who are automatically enrolled in KiwiSaver who have eight weeks to opt out, so that could potentially affect the total.

“These figures are heartening, but they are just the start,” the ministers said.

“We’ll see them continue to rise as people realise the value of saving for retirement – especially when, subject to legislation now before Parliament being passed, compulsory employer contributions to KiwiSaver start next year.”