KiwiSaver protection bill aims to help workers

Labour MP Tracey McLellan’s KiwiSaver protection bill could help the country’s most vulnerable workers get to retirement with some savings, the finance and expenditure select committee has heard.

McLellan’s Employment Relations (Protection for KiwiSaver Members) Amendment Bill got through its first reading in August last year with the support of National MPs, and came before the select committee hearing yesterday.

The bill, if it became law, would turn the clock back to the early days of KiwiSaver, when employers had to make matching contributions of 3% to the KiwiSaver accounts of workers who decided to contribute to the scheme.

A law change when National took power in 2008 created what McLellan called a “loophole” that allowed employers to strike individual “total remuneration agreements” with employees under which they could deduct their employer contributions from those employees’ salaries.

“As a country we have a long history of not being very good at saving,” said McLellan, who is pessimistic her bill will be given the nod by a Government that has set out its stall to create a more “flexible” workforce.

She told the select committee that about half of employers now use total remuneration contracts to effectively contract out of paying matching employer contributions to some of their workers. About a quarter always used this approach, and a further 20% used it with some workers, she said.

It was not well-paid executives who were usually required to agree to total remuneration deals, but “general” workers, she said.

McLellan argued her bill was good not only for workers, but it was good for “New Zealand Inc” and for the future fiscal position of the Government, as it would increase the pool of capital available, reducing the need for government support for people in retirement.

Deborah Russell, Labour’s spokesperson for revenue, science, innovation and technology, who is a member of the select committee, said McLellan’s bill, if it became law, would also support the national strategy for older people to “age in place” by being able to afford to stay in their own homes for longer. That, she said, would help take pressure off residential aged-care facilities.

Melissa Ansell-Bridges, secretary of the Council of Trade Unions, said recent changes to employment laws – the repeal of the Fair Pay law and the reintroduction of 90-day work trials – had increased the imbalance in power between workers and employers.

“These are some of the most vulnerable workers in New Zealand,” she said. “They are also at most risk of entering retirement with inadequate savings.”

Employer lobbying association Business NZ opposes the bill, but did not speak at the select committee.

Critics, including ACT, which was in opposition at the time of the first reading, said McLellan’s proposal would add cost to business and interfere with workers’ freedom to negotiate employment agreements with employers.

Workplace Relations Minister Brooke van Velden has signalled the Government’s plans to reform employment law to increase “flexibility” and the “freedom to contract for workers and businesses”.

Commerce and Consumer Affairs Minister Andrew Bayly has signalled he will review KiwiSaver in the second half of the year.