Act leader David Seymour announced the policy at the party\u2019s campaign launch on Sunday. \u201cOther parties want to force your money into KiwiSaver, then tax you,\u201d he said.<\/p>\n
Act puts the net cost at $2,396,000,000 (almost $2.4 billion) over the four years to 2030\/31.<\/p>\n
That is $4,082,000,000 for removing tax on KiwiSaver earnings and $904 million for non-KiwiSaver super (less $2.59b saved by ending the subsidies).<\/p>\n
The party says a 20-year-old builder on $60,000 would have an extra $209,486 at 65. A 50-year-old office manager on $80,000 would have an extra $20,878. Both assume the average KiwiSaver balance for their age.<\/p>\n
What do people say about it?<\/p>\n
The policy has generally been received well by those in the financial investment sector who want to see New Zealand boost its overall savings rate.<\/p>\n
Tax adviser Terry Baucher told RNZ that the policy would boost superannuation savings.<\/p>\n
But he has warned that it would be more beneficial to higher earners and people with bigger KiwiSaver balances.<\/p>\n
So on that basis, it doesn\u2019t address the equity issues that other parties are seeking to address with compulsion and higher employer contributions.<\/p>\n
Act is opposed to compulsory savings regimes, so this is an ideologically consistent way for the party to get on board the KiwiSaver reform bandwagon.<\/p>\n
How does it compare with other parties\u2019 policies?<\/p>\n
National, New Zealand First, Labour and the Opportunity Party are all proposing to boost KiwiSaver by increasing the minimum contributions and by making it compulsory to join.<\/p>\n
National would make KiwiSaver compulsory from July 1, 2028 and lift employee and employer contributions to 6% each by 2032. Babies would get a $1500 starting payment.<\/p>\n
Labour would only make the employer contribution compulsory and lift it to 6%, while the employee rate rises progressively to 6% by 2032. Employers would have to keep contributing if a worker pauses their own contributions. It would also ban \u201ctotal remuneration\u201d contracts that absorb the employer contribution into salary.<\/p>\n
New Zealand First wants every newborn citizen automatically enrolled with a $1000 payment and higher minimum contributions of up to 10%.<\/p>\n
The Opportunity Party proposes a compulsory \u201cKiwiSaver 2.0\u201d with 6% contributions from employers and workers.<\/p>\n
Is it likely to happen?<\/p>\n
It seems unlikely Act would get this through coalition talks. Both National and NZ First (Act\u2019s likely coalition partners) have policies which push compulsory savings, boost contributions and introduce a new government kickstart.<\/p>\n
Those policies are well aligned, so the weight of numbers in any centre-right coalition talks would be against Act.<\/p>\n
That said it is not impossible and a lot would depend on the final vote count and the various other policy trade-offs to be made.<\/p>\n
The bottom line \u2013 would it be good for New Zealand?<\/p>\n
Economist (and a prominent proponent of KiwiSaver reform) Leonard Hong says the policy would boost private household savings and support capital accumulation in the economy.<\/p>\n
On balance, it would be good for New Zealand, he says.<\/p>\n
But Hong much prefers Labour and National\u2019s approach overall.<\/p>\n
\u201cAct have never liked KiwiSaver for time immemorial and this is an attempt to make themselves relevant to the discussion,\u201d he says.<\/p>\n
\u201cI\u2019d emphasise that this will further worsen inequality for the poor if it should remain voluntary, becoming a tax cut for the rich, who have massive accumulation of capital via KiwiSaver funds already.\u201d<\/p>\n
But more broadly, Hong is pleased to see another party looking to boost savings.<\/p>\n
\u201cIt\u2019s fantastic that most political parties have their own version of KiwiSaver policies,\u201d he says.<\/p>\n
\u201cAct\u2019s tax tweaks go further than what I was recommending but if something like a switch to [a tax-exempt] model is feasible in the next Government, everyone in the country will benefit.\u201d<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n","protected":false},"excerpt":{"rendered":"Act leader David Seymour announced the policy at the party\u2019s campaign launch on Sunday. \u201cOther parties want to…\n","protected":false},"author":2,"featured_media":620979,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[23503,11231,23485,27126,138,9349,40922,6097,5903,246,10938,702,88972,6964,20409,15220,29391,111,139,69,3111,244,245,2170,7254,1963,223,1865,59504,6923,1533,4576,80],"class_list":["post-620978","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-acts","tag-boost","tag-bottom","tag-break","tag-business","tag-checks","tag-dann","tag-down","tag-election","tag-finance","tag-herald","tag-it","tag-journalists","tag-kiwisaver","tag-liam","tag-line","tag-mean","tag-new-zealand","tag-newzealand","tag-nz","tag-out","tag-personal-finance","tag-personalfinance","tag-plan","tag-policy","tag-series","tag-the","tag-today","tag-turbocharge","tag-what","tag-will","tag-work","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/620978","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=620978"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/620978\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/620979"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=620978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=620978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=620978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}