KEY POINTS:
Employers will be picking up a bigger KiwiSaver tab in the next couple of years if National wins the election.
But after that their burden will be lighter if they have higher-paid employees.
This results from the interaction of two National proposals:
* The employer tax credit, which matches the employer contribution to each employee up to $1043 a year, will be abolished from April 2009.
* The employer contribution will be frozen at 2 per cent of employees' pay from April 2009, whereas under the current law it will rise to 3 per cent in April 2010 and 4 per cent from April 2011 onwards.
Clearly the first of these will hurt employers and the second will help them. When you net out the two, all employers will be out of pocket until April 2010 under National. But after that it depends on employee incomes.
From April 2010 on, employers in industries with extremely high pay will be better off under National.
For example, in 2010 to 2011, under Labour the employer of a KiwiSaver earning $200,000 will contribute 3 per cent, or $6000, minus the $1043 tax credit, which comes to $4957. Under National they would contribute 2 per cent, or $4000.
An employer of a KiwiSaver earning $40,000 will contribute $157 under Labour, after the tax credit. Under National, they would contribute $800.
From 2011, the cut-off point drops. An employer of KiwiSavers earning more than $52,150 will contribute more under Labour. But if the employees earn less than $52,150, the employer will contribute more under National.
For example, an employee on $40,000 would cost their employer $557 a year under Labour and $800 under National. But an employee on $75,000 would cost their employer $1957 a year under Labour and $1500 under National.
Another KiwiSaver change proposed by National concerns the recent so-called "Mallard amendment" to the Employment Relations Act.
The Mallard amendment forbids employers from giving non-KiwiSaver employees a pay rise to match the contributions they are making to KiwiSavers. Labour Minister Trevor Mallard said he wanted KiwiSavers to be in a preferential position.
However, National says it would allow the forbidden arrangements to occur, "if they are negotiated between employers and employees in good faith, and if employers are fulfilling all their obligations to make KiwiSaver contributions".
It would also amend the KiwiSaver Act to "ensure that when an employee joins KiwiSaver, the compulsory contribution from their employer is a genuine addition to their normal pay".
