19 Aug 2011

'Debate needed' about compulsory super

7:33 am on 19 August 2011

New Zealand should consider re-introducing means testing for national superannuation if the Government is serious about moving towards a compulsory KiwiSaver workplace savings scheme, the Financial Services Institute of Australasia says.

A UMR survey commissioned by the Financial Services Institute of Australasia (Finsia) found a majority of people supported KiwiSaver becoming compulsory, but that further tinkering could undermine support for the popular scheme.

The Government is considering automatic enrolment of people in KiwiSaver, but Finsia chief executive Russell Thomas says that should be accompanied by changes in superannuation.

He says if the Government wants to make KiwiSaver compulsory, it's important to look at the future of New Zealand superannuation and the introduction of a means based test over a period of time.

Mr Thomas says it is important to have the debate at a holistic level, and introducing automatic enrolment and tinkering with the incentives are piecemeal attempts to address the superannuation debate.

Westpac boss calls for compulsory super

Separately, Westpac New Zealand's chief executive George Frazis is calling for compulsory superannuation as a measure for guaranteeing the country's future economic prosperity.

Westpac is forecasting GDP growth of 4.5% in 2012. Mr Frazis says the recovery is still on track despite the latest markets shock which caused the cost of credit to rise, highlighting New Zealand's reliance on global markets to fund debt.

But Mr Frazis says increased savings and compulsory superannuation would make New Zealand less vulnerable to global wholesale markets.

He highlights savings, better infrastructure and productivity as three of seven key priorities for ongoing prosperity.

Mr Frazis says it would be more appropriate to think about introducing compulsory superannuation once the economic recovery starts coming through.

He says other priorities for New Zealand include seriously considering joint financial regulation with Australia, ensuring its net migration is at a high level and aspiring to have a world class university in the top 50.