Making KiwiSaver compulsory would prevent small Northland businesses employing more staff, a business leader warns.

Last week, Labour said it would raise the age of eligibility for New Zealand Superannuation to 67, make KiwiSaver compulsory for employees and increase the contribution rate if voted into power.

Deputy Labour leader David Parker said newly-released Census data backed the decision - with the number of people in the 50 to 59 age bracket jumping by 22 per cent since 2006 to 989,000.

"Although the total population increased, fewer people are under 15 than in 2006 and this reinforces the need to address superannuation," he said.


Paying for superannuation cost more than all benefits combined and, within two years, he expected it to exceed the annual spend on education.

Northland Chamber of Commerce chief executive Tony Collins said because Northland had many small enterprises, they were likely to feel the heat financially if KiwiSaver was made compulsory - lumping businesses with extra costs of employer contributions to the state-run savings scheme.

"It could actually present some pressure on business owners and may also influence some individuals on whether they employ extra staff or not."

However, KiwiSaver had some "very strong benefits" - especially increasing financial literacy. "[KiwiSaver] starts creating good habits and it also shows a really good commitment from employers in benefiting people who work for them."

But any cost to employers would impact decisions on whether to hire new workers, Mr Collins warned.

Meanwhile, raising the superannuation age would see some industries benefit by retaining experienced staff, while others would struggle with ailing workers.

"The reality is we're going to have a population with more older people."

Labour has proposed raising the NZ super eligibility age from 2020, increasing it two months at a time to reach 67 by 2026.

The party would also make KiwiSaver compulsory for those in employment. It would be optional for the self-employed and those without an income.

The National-led Government put off automatically enrolling all employees in KiwiSaver because of the cost.

Labour would also look to change the default setting from the minimum contribution to an age-appropriate one - a decision the Government recently decided against.

Business New Zealand chief executive Phil O'Reilly backed raising the super eligibility age to 67 and said it was unfortunate the issue had become a political debate. "I don't hear many voices at all who don't agree with raising the minimum age for superannuation."

However, making KiwiSaver compulsory wasn't necessary, Mr O'Reilly said.