Hol­i­days a ‘kink’ in the ar­mour

Central Leader - - MILESTONES - ROB STOCK

The ar­chi­tect of Ki­wiSaver is con­cerned about the nearly 130,000 peo­ple on con­tri­bu­tion ‘‘hol­i­days’’.

Ki­wiSaver al­lows peo­ple to stop con­tri­bu­tions for a pe­riod of time, a fea­ture de­signed to al­low peo­ple to cope with sud­den cash­flow crunches, or to use their money to do other things, like pay down their mort­gage.

But Sir Michael Cullen, who as Labour fi­nance min­is­ter launched of Ki­wiSaver in 2007, now calls the hol­i­day rule a ‘‘kink’’ in the de­sign of Ki­wiSaver.

‘‘I am a little wor­ried about the high level of mem­bers on hol­i­day,’’ Cullen said.

Ex­perts like David Boyle from the gov­ern­ment-funded Com­mis­sion for Fi­nan­cial Ca­pa­bil­ity have sug­gested it is time to change the rules around Ki­wiSaver con­tri­bu­tion hol­i­days, as well as chang­ing the name to some­thing less ‘‘pos­i­tive’’.

Cur­rently, peo­ple can take a con­tri­bu­tion hol­i­day, and not have to reap­ply for a new one for five years. The com­mis­sion rec­om­mended late last year that peo­ple should have to reap­ply af­ter one year, forc­ing them to think about what it meant for their retirement to go an­other year with­out con­tribut­ing to their retirement nest egg.

A poll done by the com­mis­sion last year showed 52 per cent agreed to the pro­posed change but the Gov­ern­ment has not acted on the sug­ges­tion.

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