Academic calls for KiwiSaver employer contributions after 65
Employers should have to continue paying KiwiSaver contributions to people who are over 65, an academic has told politicians considering changes to the scheme.
Dr Claire Matthews, an expert in retirement savings at Massey University, spoke to the finance and expenditure select committee yesterday as part of her submission on the taxation omnibus bill.
It includes proposals to drop the contributions suspension period for KiwiSaver from five years to one year, add new contribution rates of 6 per cent and 10 per cent and allow people over the age of 65 to join the scheme.
But Matthews said she didn’t see the value in opening the scheme to over 65-yearolds and believed a better change would be to make employers continue contributing for those still working after 65.
It is currently left up to employers to decide whether they will continue to contribute or not, which Matthews said was inequitable.
“Currently the legislation says, irrespective of the age you joined, your employer does not have to pay their contribution to your KiwiSaver account once you turn 65. To me, that’s unfair as a 65-year-old employee effectively gets paid less than their 64-year-old colleague.”
Matthews said the committee seemed supportive of the idea, agreeing it was “ageist”.
She also disagreed with the approach of adding 6 per cent and 10 per cent contribution rates to the current 3, 4 and 8 per cent options saying it would be better to have a minimum and then options to increase it by half a per cent.
A survey of 500 companies by the Commission For Financial Capability revealed only a quarter were paying the 3 per cent KiwiSaver contribution for employees over the age of 65.