Tamsyn Parker: KiwiSaver election promises

The announced policies from National, Labour and NZ First all seek to use KiwiSaver for non-retirement related purposes. Photo / 123RF

There are minefield of promises across the parties when it comes to KiwiSaver and New Zealand Superannuation.

The Act Party would axe all government subsidies for KiwiSaver and raise the age of entitlement for New Zealand Superannuation to 67.

Labour would also increase the age of eligibility for NZ Super to 67 but would keep access to KiwiSaver at 65 and make it compulsory for all employees excluding and low income earners.

The Green Party and New Zealand First are both keen to set up state-run KiwiSaver providers which would manage money at a low cost and Maori and the Mana party would like to lower the age of NZ Super eligibility to 60 to help counter the lower life expectancy of Maori and Pacific people.

KiwiSaver - what you get now
• KiwiSaver is voluntary to join.

• People who change or start new jobs are automatically enrolled but can choose to opt out between two and eight weeks after being enrolled

• After one year savers can take a contribution holiday for up to five years. No reason is needed to do this

• Employers and employees contribute 3 per cent each of a person's gross income.

• The employer contribution is taxed but not the employee contribution.

• The Government puts in $1000 for all those who sign up including children

• Over 18 year olds can get 50c from the Government for every $1 they put in up to $1043 per year equivalent to $521 from the Government.

• People can take their money out of KiwiSaver when they become eligible for NZ Super (provided they have been a member for five years).

• They can also take their money out to buy their first home and get subsidies to help with this.

What the parties are promising to do to KiwiSaver

National
• Keep the age of NZ Super at 65

• Introduce auto-enrolment for KiwiSaver for all employees when the Government is running a sufficient surplus and it can be afforded.

• There is no set date for auto-enrolment but it would apply to everyone in work and aged 18 or over.

• Retain the option for people to opt out if they wish to.

Labour
• Raise the age of NZ Super to 67 over several years to 2020

• Keep the age of withdrawal for KiwiSaver at 65

• Introduce auto-enrolment for all employees over 18 from October 2015. Self-employed people and low income workers would be exempt.

• People will not be able to opt out except under hardship provisions

• Increase contributions from a combined 6 per cent (employee and employer) to a combined 9 per cent in 2021.

• People auto-enrolled in October 2015 will start contributing at 1 per cent rising by 1 percentage point per annum in 2017 - 2019 and then 0.25 per cent to reach 4.5 per cent by 2021.

• The $1000 Government contribution will be spread over five years

• Labour will ask the Reserve Bank and Treasury to assess the option of using KiwiSaver as a monetary tool which could vary the employee contribution rate.

Green Party
• Keep the age of NZ Super at 65

• Introduce auto-enrolment but with the option for people to opt-out on any reason

• Set up a 'public option' KiwiSaver provider to save on fees and costs

• The money would be managed by The Guardians of the New Zealand Superannuation Fund

• Individual KiwiSaver accounts would be looked after by Kiwibank or Inland Revenue who would deal directly with the public

• Estimates savers could cut their fee costs by 40 per cent over a lifetime of saving

Act Party
• Raise the age of NZ Super to 67. Has yet to decide over what timeframe but it would be a lengthy period

• Index increases in the rate of NZ Super to inflation not wage increases as it is now

• Create an index that reflects the costs of those aged over 67

*Remove all KiwiSaver subsidies - doesn't see a need for the scheme to exist and believes people should have a private pension savings scheme.

New Zealand First
• Keep the age of NZ Super at 65

• Supports compulsory KiwiSaver with an account opened for every newborn with the $1000 kickstart with exemptions for very low incomes and other exceptional circumstances

• Would make KiwiSaver accessible for tertiary fees as well as first home

• Would review fees and develop options to minimise them

• Set up a new KiwiSaver provider called KiwiFund which would be state-run by a newly set up agency.

• KiwiFund would have low fees and would guarantee the money people put in but not the returns on that money

• It would invest in more New Zealand land, assets, enterprises and infrastructure

• Believes it would cut fees across the industry and make providers more competitive

• KiwiFund would be open to all New Zealand citizens and permanent residents.

United Future
• Would introduce flexi-super for NZ Super allowing people to be paid from age 60 at a reduced rate or deferred super payments until up to age 70 and get a higher rate

• Would keep the age of withdrawal from KiwiSaver at 65 but make the scheme compulsory for all workers by 2020

• Would allow low income earners to contribute at a lower rate for a period of time.