KiwiSaver increases inequality, says study

KiwiSaver will increase inequality and benefit the wealthy, according to research done at Waikato University.

More than 380,000 people have joined KiwiSaver to take advantage of tax breaks and a $1000 kick-start payment.

Professor John Gibson of the university's management school said NZ Super helped to "equalise lifetime incomes" but KiwiSaver did the opposite.

"What's having the biggest impact [on inequality] is the generous taxpayer incentives provided to KiwiSaver members and in particular the exemption from withholding tax."

He said because these were not capped, higher earners received more benefit. "Non-earners and the self-employed don't benefit at all."

According to Professor Gibson's research, more than 45 per cent of the working-age population earn below $30,000, but they will get just 15 per cent of KiwiSaver tax incentives.

The 11 per cent of the working-age population who earn more than $70,000 will receive 18 per cent of KiwiSaver tax incentives.

Women, Maori, Pacific Islanders and those without qualifications will get a much smaller share than white, educated males, he said. "You have to ask if that is a fair use of taxpayers' money."

Professor Gibson also said KiwiSaver had not inspired new saving but rather a "reshuffling" of existing savings.

The research was based on a mail survey last month. About 1600 surveys were sent out and 598 completed and returned.


Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter


© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production apcf03 at 29 May 2017 13:14:56 Processing Time: 1712ms