National’s KiwiSaver proposal wins small business support but raises fairness concerns

Rebecca “Bex” Twemlow, founding director of Firebrand, said she was “really pleased” about the National Party’s KiwiSaver proposal.

One key concern expressed about the policy is whether employers would shift the burden of their contribution back on to employees by switching to a total remuneration model.

Twemlow said business owners have a responsibility to take care of their people.

“You know what you’re doing if you’re talking about it. It wouldn’t be what I say is good business practice, and in the current environment it’s not the case, but it’s not always going to be like this.

“There will be a change and it becomes an employee’s choice on who they work for. If those businesses are good businesses that take care of their staff, they’re going to choose them.”

She also expressed support for incorporating 16- and 17-year-olds into the scheme, and said they needed to learn the value of saving at an early stage.

Twemlow also supported the prospect of making KiwiSaver compulsory at some time in the future.

Roscoe Price Moor, founder of travel app Roady, was inspired by Pokemon Go’s ability to get people outdoors, but wanted to make an app for travel experiences instead. Photo / Supplied

Reinvestment opportunity

Roscoe Price Moor, founder of travel start-up Roady, said any increase in employer contributions is “definitely felt”.

“Particularly as we’re operating on lean margins and balancing cashflow with product development and expansion plans. That said, we’re committed to supporting our team’s long-term financial wellbeing,” Price Moor said.

Price Moor couldn’t say whether the changes would make him reconsider hiring or remuneration decisions, but suggested the additional funds raised under the proposed changes could be used elsewhere.

“It would be great to see some of these funds invested back into supporting the start-up ecosystem here in New Zealand.

“Initiatives that help Kiwi businesses scale and ultimately create more local jobs, while supporting their employees, would have a real benefit for the wider economy.”

Feijoa co-founders Ben Davin (left) and Mark White-Robinson aim to facilitate small but regular frictionless transactions into New Zealanders’ KiwiSaver accounts.

Targeted effects

Ben Davin and Mark White-Robinson, co-founders of KiwiSaver start-up Feijoa, also supported the changes and said the timeline should allow businesses to adjust to the increase as it’s phased in.

“Increased contributions will improve both individual outcomes – like getting into first homes and retirement security – and national outcomes through greater capital depth for infrastructure,” Davin and White-Robinson said.

“We’d also hope the changes creates downward pressure on fees across the industry, with providers passing some benefit back to members through lower costs – which would further improve long-term outcomes for savers and strengthen the overall effectiveness of KiwiSaver.”

However, the pair said the changes were PAYE-centric and didn’t help people outside employment or those who can’t afford higher contributions, suggesting they may stop saving altogether.

“Locking up a fixed percentage of wages doesn’t work for everyone.”

They said small businesses don’t have a “magic pot of super-profits” they can rely on to fund greater contributions, and they expected slower increases in remuneration outside KiwiSaver to balance the situation.

They said if small businesses can’t offset higher contribution costs by adjusting wages, it may impact their hiring decisions and timing.

“Ultimately, it’s a balance between encouraging people to save and invest for their retirement, while giving the tools and flexibility for people to easily find what works for them.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.

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