KEY POINTS:
KiwiSaver providers are this weekend conducting final testing to make sure they're geared up to handle the start of employer contributions to the scheme on Tuesday.
From April 1, employers are required to contribute one per cent to the KiwiSaver accounts of employees.
This means a huge increase
in the volume of contributions which must be processed by Inland Revenue and sent on to providers. Given the much publicised teething problems the system has suffered in the first phase of KiwiSaver, employers are not holding their breath that "KiwiSaver Mark II" will go off without a hitch.
"Come Tuesday, we're going to give it a go, and I think everybody realises it's going to be a very big learning curve," EMA (Northern) employment services manager David Lowe said.
The EMA scored a victory this week when the Government agreed that employers who paid fortnightly would miss out on part of the KiwiSaver tax credit due to them. The system was not geared up for the fact that twice a year these employers make three payments a month. Affected employers will now be able to claim the missed tax credits, amounting to about $87 per employee annually, at the end of the year.
Lowe did not believe all the kinks in the system for handling employee contributions were resolved yet, and questioned whether processing employer contributions on top of that would compound the problem. "Only IRD know the answer to that."
However Lowe praised IRD, saying staff had been "absolutely excellent" to work with, and the real problem had been the speed with which the Government introduced the retirement savings scheme.
Default provider ASB said it was "comfortable" it was ready to handle the employer side of the equation.
Head of business ventures Peter Hall said in the past month the bank had seen a 20 per cent increase in the number of people signing up to the scheme. "The bigger issue is the increase in people who are actually taking up KiwiSaver because of the additional incentives."
Fellow default provider ING, which hit the headlines earlier this month after six month-old KiwiSaver contributions still hadn't been added to ING funds because of message "scrambling" between it and IRD, said it was "quietly confident".
General manager of marketing Steven Giannoulis said it was a busy year-end, as providers were also reporting under the new PIE (portfolio investment entity) tax regime for the first time on April 1.
However, he said, providers could make certain projections about how many employer contributions they may have to handle because they knew how many KiwiSavers there were, as opposed to leaping into the unknown when the super scheme was launched.
Giannoulis said the scrambling issue had now been resolved, and ING would put in place mechanisms to prevent it from happening again.
Bernie O'Brien, chief executive of provider Mercer New Zealand, said his institution was confident it could handle the employer contributions, but it was a "wait-and-see situation".
He was reluctant to make any predictions, "because we were all surprised at the take-up rate [of KiwiSaver] through the second half of last year".
O'Brien predicted a sharp increase in employees joining KiwiSaver. "We've got something like a third of [corporate clients] who are interested in contributing above the minimum level, and that's going to drive some of their employees to join, I think."
