29 May 2015

Govt considers 'mass auto-enrolment'

2:20 pm on 29 May 2015

Just days after scrapping the $1000 KiwiSaver kickstart payment, the Government is considering automatically enrolling all workers in the retirement savings scheme.

Bill English giving his Post Budget 2015 speech.

Finance Minister Bill English gives his post-Budget 2015 speech in Wellington Photo: RNZ / Alexander Robertson

Finance Minister Bill English said mass enrolment was now more affordable, given the kickstart payment had been dumped.

Under KiwiSaver, people are enrolled when they start a new job, but they can opt out.

The Government previously planned to automatically enrol all workers, irrespective of whether they were starting a new job, but still with an opt-out clause. It was forced to drop the proposal, however, as it was too expensive.

Mr English said the idea was now back on the agenda.

"We're... keen on this, what we call mass auto-enrolment, and that is auto-enrolling everyone who's not in the scheme, so that they then have the opportunity to opt out. With the kickstart payment no longer in place, that's much cheaper than it used to be."

Mr English said the Government would work on the proposal over the next six to 12 months.

"We'll now go back and revise the potential costs of mass auto-enrolment, because it would, you know, catch a whole lot of people who might want to reconsider whether they should be in KiwiSaver, because it's a pretty good deal.

"I mean, they get the employer matching subsidy, and the Government subsidy. There's really no other investment they can make, or no other form of savings, that can match the return of KiwiSaver," he said.

Labour Party finance spokesperson Grant Robertson was not surprised the Government was now reconsidering enrolling all workers in KiwiSaver.

"There's no doubt that removing the kickstart would make it easier to do that. I think if you look at National's record on KiwiSaver over the last seven years, they've consistently undermined it and diminished the scheme," Mr Robertson said.

Metiria Turei giving her 2015 Budget Speech to the house, parliament.

Greens co-leader Metiria Turei - pictured on the day of the release of Budget 2015 Photo: RNZ / Alexander Robertson

Greens co-leader Metiria Turei said it would be tough for low income workers to be automatically enrolled in KiwiSaver, when they would not get the $1000 kickstart payment.

"There's no indication that low income workers are going to get more information or better information about KiwiSaver, what the impacts will be of automatic enrolment, how much money they'll lose in their weekly pay and that they can opt out if they need to.

"[In] which case, it'll be a double blow to them. No $1000 kickstart to make it worthwhile, and money taken out of their pay, and they don't know how to stop it," Mrs Turei said.

Mr Robertson said the Government was piling one unfairness on another when it came to the changes it was making to KiwiSaver.

"We want to see KiwiSaver as a strong scheme with as many New Zealanders in it as possible. But to get there, by consistently undermining the value of it, is not the way it should have been done," he said.

New Zealand First leader Winston Peters said it was a cynical move because no mention was made of it in the Budget.

"That's what's sinister about it, why couldn't they just come clean and tell the public completely what they meant."

Mr Peters said he did not oppose automatic enrolment; in fact he would make KiwiSaver compulsory but everyone should still get the $1000 kickstart.

But the Government argued the scheme was still generous, despite the cuts it had made to it.

And it seems likely it will proceed with the mass enrolment of all workers, once it has determined how much cheaper that will be now it no longer pays the $1000 kickstart payment.

Get the RNZ app

for ad-free news and current affairs