Holy Kiwisaver nest egg, Batman!
The Retirement Commissioner has released recommendations to beef up Kiwisaver, and has used Barbie, Ken and superhero doll stop-motion video clips to do it.
The proposed changes include increasing the minimum Kiwisaver employee and employer contributions from 3 per cent to 4 per cent of savers’ before-tax salaries.
Commissioner Diane Maxwell also recommended savers be allowed to set up automatic annual increases in their contribution rates each year.
Maxwell released her recommendations using the Wirewax online interactive platform used by Television New Zealand to promote Shortland Street.
After her 2013 retirement policy report fell on deaf ears, Maxwell vowed not to release another dull paper-based report.
Wirewax allowed her to present her recommendations in a way that was more fun, and more likely to be noticed by the public and politicians, including through the use of video clips featuring Batman, Superman, Ken and Barbie.
Maxwell’s key proposals included increasing minimum employer and employee contributions from 3 per cent to 4 per cent through a series of 0.25 per cent increases.
She would also like Kiwisavers to be given the power to set automated annual increases of 0.25 per cent, 0.5 per cent or 1 per cent in their personal contribution rates, so they could gradually build their savings habit.
Currently, people can save 3 per cent, 4 per cent or 8 per cent of their pre-tax salary into Kiwisaver, but Maxwell would like to see people able to nominate contribution rates of 6 per cent and 10 per cent, if they wanted to save more.
Other recommendations included allowing people over age 65 to join Kiwisaver, and cutting the maximum contributions ‘‘holiday’’ from five years to one year.
Maxwell believed it was unfair to prevent the over-65s from joining Kiwisaver as many were still working, and Kiwisaver provided access to lower-cost managed funds.
An online survey the Commission for Financial Capability carried out earlier this year suggests many people would support Maxwell’s recommendations.
The majority of the more than 1800 people surveyed thought savers should be able to choose their own contribution levels.
As Retirement Commissioner, Maxwell has an obligation every three years to advise Parliament on retirement income policy.
The question now is whether MPS, and especially the Government, will accept the recommendations, which could take a bite out of the Budget surplus.
Anything that increases Kiwisaver membership and savings rates would end up costing the taxpayer more in annual ‘‘member tax credit’’ subsidies.
‘‘If the work succeeds it would cost the Government more,’’ Maxwell said.
There were currently about 1.2 million Kiwisaver members and non-members getting no, or only partial, member tax credits.
The maximum tax credit per person is $521.43.
Bill English, who is expected to be the next prime minister, has cut Kiwisaver not once but twice as Minister of Finance, halving the member tax credit and removing the $1000 kickstarter incentive to join Kiwisaver.