Cross Party Agreement, Needed for KiwiSavers according to Sam Stabbs
An assurance that KiwiSavers will be made sustainable in the long run was announced together with its changes. However, it is seen that the continual tinkering of the scheme may undermine the confidence people need for long term retirement planning.
The current government’s plan is to slash debt, cut spending, and raise revenue.
To do this, member tax credits are halved, all employer contributions are taxed, and minimum employer and employee contributions are increased from 2 to 3 per cent.
It is seen that the government’s coffers will be earning by the time the KiwiSaver Kitty reaches $25 billion in 2015 and $60 billion in 2021, plus the income taxes collected from contributions and taxes on KiwiSavers accounts.
A gradual shift in funding the burden of retirement living costs away from the state and on to the workplace is seen. However, what is disappointing is the absence of a plan for progressive increases across all contribution rates.
Employee contribution rate options of 3 per cent, 4 per cent, and 8 percent will apply on 2013. This is also true for the employee’s compulsory 3 per cent contribution rate.
The government should be laying out where contribution rates need to trend after 2013. This will give workers the confidence that they can save adequately.
The Superannuation Guarantee Rate contribution of Australia’s compulsory workplace savings scheme has been set at 9 per cent. This will increase to 12 per cent in increment between 2013 and 2020.
This 12 per cent is seen to add an extra A$108,000 to the retirement nest egg of a 30-year-old worker who is earning a full-time wage. Since Australians earn more than New Zealanders, they can save up more for their retirement.
To assure long term stability for New Zealand Superannuation, Superannuation Accord has agreed to some basic, hard-wired features.
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Source : http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10728710
