KiwiSaver should be made compulsory, Cullen says
AUCKLAND: KiwiSaver architect Sir Michael Cullen says the scheme should be made compulsory to prevent widening inequality at retirement.
But Finance Minister Steven Joyce said the Government would not force people to sign up to the scheme because it believed individuals should choose what to do with their own money.
KiwiSaver has attracted 2.75 million members since launching almost exactly 10 years ago. But more than 500,000 Kiwis aged 18 to 64 remain outside of the scheme.
Sir Michael, who never joined KiwiSaver himself, said while some of those people would not need to be in KiwiSaver because they had property investments or were in other superannuation schemes, many would be lowincome earners.
‘‘So if they are not in KiwiSaver and those a bit above them in the income scale are, then the gap between those groups are going to widen when people come to retire.’’
Sir Michael said autoenrolment should be rolled out and on balance he would make the scheme compulsory.
‘‘There are arguments both ways but I think there is a lot to be said about moving to compulsion.’’
Australia’s superannuation scheme is compulsory but people can optout of KiwiSaver if they do not want to be in it.
Mr Joyce said KiwiSaver could not be viewed in isolation and had to be coupled with New Zealand Superannuation.
‘‘It provides a reasonable level of income for over65s.’’
The fact that NZ Super was universal and allowed people to continue to work addressed those equity concerns, he said.
The Government talked of a oneoff autoenrolment in 2014 but put it on hold for affordability reasons.
Mr Joyce said it was not planning to introduce it at the moment and pointed to an August 2015 Treasury report which found autoenrolment would increase membership by only a small amount.
He said 75% of workingage New Zealanders were already in KiwiSaver.
It was not up to the Government to force people to save for their retirement, he said. Individuals might want to use their available funds in other ways such as investing in their own business or paying down mortgage debt.
‘‘One of the benefits of KiwiSaver, of your money being locked in until retirement, is also one of the reasons some people make other choices.’’
Labour finance spokesman Grant Robertson said Labour would be making an announcement regarding its KiwiSaver policy within the next few weeks.
But its policy before the 2014 election was to make KiwiSaver compulsory for all working New Zealanders. — NZME