Where are they?

On the trail of the miss­ing Ki­wiSavers

Sunday Star-Times - - NEWS -

The ten-year an­niver­sary of Ki­wiSaver takes place next month, and still the mys­tery of the miss­ing Ki­wiSavers re­mains un­solved.

Ki­wiSaver launched on 1 July 2007, in the op­ti­mistic pe­riod be­fore the Global Fi­nan­cial Cri­sis shook the world.

It was to be the super scheme that got New Zealand sav­ing, and Labour’s back door way of giv­ing Ki­wis a tax cut, with­out them rush­ing out to spend it on prop­erty or con­sumer goods.

But at the end of June last year, 43 per cent of Ki­wiSavers weren’t mak­ing reg­u­lar con­tri­bu­tions.

There’s a grow­ing cho­rus of calls to un­der­stand what’s be­hind that, in­clud­ing from the Com­mis­sion for Fi­nan­cial Ca­pa­bil­ity (CFC) and gi­ant Ki­wiSaver man­ager AMP.

And some be­lieve it’s time for a re­think to stop Ki­wiSaver in­cen­tives from flow­ing to the rich, while the poor miss out.

The poorly paid:

‘‘Poor fam­i­lies make poor choices out of ne­ces­sity,’’ says Chas Muir from the E tu food sec­tor union.

Min­i­mum wage work­ers sim­ply can’t af­ford to make Ki­wiSaver con­tri­bu­tions, he says.

Ped­dling poverty wages pro­tects em­ploy­ers from hav­ing to make many match­ing Ki­wiSaver con­tri­bu­tions.

‘‘We have paid work­ers who have to make the choice of whether to take a sick child to the doc­tor or den­tist, or put food on the table.’’

For such peo­ple, Ki­wiSaver isn’t an op­tion.

In 2015, the econ­o­mists at NZIER found lower lev­els of en­gage­ment with Ki­wiSaver among peo­ple on lower dis­pos­able house­hold in­comes, such as sin­gle peo­ple, renters, the heav­ily in­debted and the poorly ed­u­cated.

There’s ev­i­dence that while the well-paid get the full mem­ber tax credit (MTC) tax­payer sub­sidy of $521.43 a year, many lower-paid work­ers miss out en­tirely, or only get part of it.

The 2014 Ki­wiSaver Eval­u­a­tion re­port found less than half of Ki­wiSaver mem­bers got the full MTC, mean­ing they, and their em­ployer, had con­trib­uted less than $1042.86 dur­ing the year.

AMP’s gen­eral man­ager Blair Ver­non, called for MTC pol­icy to be re-eval­u­ated, in­clud­ing look­ing at stop­ping pay­ing MTCs to peo­ple on in­comes of $100,000 or more, while dou­bling the MTC for lower-paid work­ers.

That would give them a $1 mem­ber tax credit for ev­ery $1 they saved, while mid­dle-in­come earn­ers would still get 50 cents in cred­its for ev­ery $1 saved.

The CFC’s David Boyle, said con­sid­er­a­tion could also be given to 1 per cent and 2 per cent con­tri­bu­tion rates, to make it eas­ier for lower in­come fam­i­lies to save some­thing.

The self-em­ployed:

‘‘Many self-em­ployed mem­bers choose to make lump-sum con­tri­bu­tions close to the end of their tax year, rather than com­mit to reg­u­lar con­tri­bu­tions,’’ the Fi­nan­cial Mar­kets Au­thor­ity re­ported in its lat­est an­nual Ki­wiSaver re­port.

Th­ese non-con­trib­u­tors are not miss­ing at all. They’re just sav­ing the min­i­mum to get the full MTC.

The op­pressed:

Ver­non has heard anec­do­tal ev­i­dence that some em­ploy­ers make it clear that work­ers who want Ki­wiSaver have no fu­ture at their work­place.

‘‘The ques­tion is, if your em­ployer is not happy do­ing the pa­per­work, how con­fi­dent are you in push­ing for it?’’ Ver­non asks.

In many cases lower-pow­ered, younger em­ploy­ers in low-paid em­ploy­ment, join­ing on a 90-day trial pe­riod may well not dare. ‘‘They feel like they are walk­ing on eggshells,’’ Ver­non said. He called for re­search to study whether this was wide­spread. There are also a num­ber of em­ploy­ers fail­ing to make Ki­wiSaver con­tri­bu­tions.

At the end of June 2016, the amount owed by er­rant em­ploy­ers was $24.9m, ac­cord­ing to the IRD.

The chil­dren:

There was a rush to sign up chil­dren to Ki­wiSaver to get the now scrapped $1000 Kick­starter. The re­sult is 338,038 Ki­wiSavers un­der the age of 18. They don’t qual­ify for MTCs, and many do not earn reg­u­lar in­come.

Those in dire straits:

In ev­ery phase of the eco­nomic cy­cle there are some peo­ple who fall from pros­per­ity to penury. In Ki­wiSaver that is re­flected by peo­ple with­draw­ing money for hard­ship rea­sons.

In May, for ex­am­ple, 190 peo­ple with­drew money from Ki­wiSaver cit­ing fi­nan­cial hard­ship. None would be con­trib­u­tors.

The hol­i­day­mak­ers:

The CFC called on the gov­ern­ment to limit con­tri­bu­tion ‘‘hol­i­days’’ to just one year be­fore Ki­wiSavers had to ap­ply again for a new one, but the sug­ges­tion hasn’t been wel­comed.

Ki­wiSavers can go five years be­fore they must reap­ply. The ma­jor­ity of the 130,000-odd hol­i­day­mak­ers are on hol­i­days of five years, or more.

Poor fam­i­lies make poor choices out of ne­ces­sity. Chas Muir


Calls are be­ing made to in­ves­ti­gate why so many Ki­wiSavers have gone miss­ing.


Blair Ver­non, AMP New Zealand’s man­ag­ing di­rec­tor.

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