Red Alert

Archive for the ‘kiwisaver’ Category

The benefits of universal Kiwisaver

Posted by on October 28th, 2011

Labour’s proposals to create a universal Kiwisaver, that lifts in value over time will make a huge difference to the long term well being of individual New Zealanders. Here are a couple of scenarios, one for someone on average wage, one for someone on minimum wage.

kiwisaver-graph-1

John is 35 and on the average wage of around $50,000. He joined KiwiSaver in 2011. When John turns 65 he will have saved around $375,000 under Labour’s Universal KiwiSaver scheme. That is around $142,000 more than he would have otherwise saved on current settings.

kiwisaver-graph-2

Marina is 25, currently earns around $27,000 and doesn’t belong to KiwiSaver. As part of Labour’s Universal KiwiSaver, Marina will start KiwiSaver in 2014. By the time she turns 65 she will have saved $429,000.


Making Sh*t Up

Posted by on May 18th, 2011

I know sometimes people find it hard to understand why some of us, especially Labour MPs, get so upset with that “nice Mr Key”. Of course we disagree on policy, but in part I think it is because we see a side of him in Parliament others don’t. Also for me its about his tendency, to use the phrase of the moment, to “make sh*t up”.

An article in yesterday’s Dominion Post on the likelihood of further public service cuts included the following statement from John Key.

They have typically been having higher levels of wage increases prior to National coming into office; public sector wages outstripped private sector wages for a long period of time.

The problem is this is just not backed up by any evidence. Actually the Treasury told them the opposite just after the election. Ruth Dyson as Labour’s State Services Spokesperson released that document yesterday, which Labour had obtained under the OIA. It says

Public sector wage increases have not outstripped the private sector with the exception of the education and health sectors, which arguably address legacy problems and respond to international markets

The reference to education and health is to pay increases for doctors, nurses and teachers that occured under Labour. The PM in the article is talking about the core public service. In actual fact under the last Labour government the pay for “core government administration” was almost exactly in line with private sector wage increases. The PM has just made something up to suit his agenda. He needs to be called out on this, and its good the Dom Post have done so.

The NZ Herald also has an article that covers the PMs (deliberate?) vagueness, with the news that he is not sure if he is a member of Kiwisaver.

Prime Minister John Key yesterday could not remember if he was a member of KiwiSaver. “I’m a member of whatever that Government scheme is that applied to members [of parliament] that came in in 2002. “I think it might be [KiwiSaver] but I’m not 100 per cent sure.”

The register shows that Mr Key has an “individual retirement plan”.

I am sure there are a few Kiwis who would love to be in a position when you are not really sure if you are in Kiwisaver!

All over the details, that’s our PM.


Budget FAQs #3: Kiwisaver

Posted by on May 12th, 2011

 Yesterday Mr Key announced National’s intentions to cut Kiwisaver costs by:

  1. Reducing (likely by half) the member tax credit, currenlty $20 per week or $1024 per kiwisaver per year.
  2. Reversing National’s earlier move to reduce the default contribution rate from 2% to 4% by returning to it to 4%, but apparently with no increase in Crown contributions. 
  3. Requiring a small increase in matching employer contributions, although unclear how much or with what if any employer tax credit chnage.
  4. Details to come in the Budget but not to take effect until after the Budget (trying the spin that it is not another “broken promise” even though it is in a pre -election Budget and possibly legislation!)

Commentators have warned about undermining confidence in the scheme.   Among many, good commentary by Bernard Hickey here, Vernon Small here and The Standard here.

Here are some reasons the Government should think twice about changes which weaken confidence in Kiwisaver and do not contain real measures to grow the scheme: 

Its changes are regressive – tougher on low and middle income earners because they have a reduced matching contribution on the first $1000 per year they invest.  

It is a double whammy for low and middle income earners: cutting the tax credit and increasing the contribution rate at at a time when cost of living pressures are acute.

It is a confusing policy u-turn for Kiwisavers without reasonable explanation, having had their default contribution rate reduced to 2% by this Government not two years ago, and now the reverse.  The logic they used to reduce the default (reducing contribution costs to families and businesses was supposedly inportant – but apparently now is not).
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