KEY POINTS:
Fund managers say the National Party's policy of lower contributions to KiwiSaver will mean less investment for the good of New Zealand.
But they also say it may encourage more people into the scheme.
National's plan to lower mandatory employer contributions from 4 per cent to 2 per cent of a staff member's salary, and to allow employees to also halve their contributions to 2 per cent, would naturally lead to less money flowing into KiwiSaver funds.
"That does have an impact on funds under management and therefore what can be invested back into New Zealand shares, New Zealand infrastructure, etcetera," said Leo Krippner, head of investment strategy at KiwiSaver provider AMP.
The lower employer contribution was a disincentive for employees to keep putting in the full 4 per cent, he said. "On the other hand, one of the positives is a 2 per cent-plus-2 per cent scheme does make it more accessible to people who previously couldn't afford to put aside 4 per cent."
Carmel Fisher, of fellow KiwiSaver provider Fisher Funds, also welcomed the policy as an encouragement to more New Zealanders to join up.
She was pleased National would retain the initial $1000 Government contribution, including for those under 18. "It's just a great kickstart for children - you get them signed up to KiwiSaver young, they get $1000, that starts working for them from an early age, and also they learn about savings and investing."
She said the lower inflow of investment funds was a matter of timing, and could well increase in the future as had occurred in Australia.
"There will still be some who choose to save 4 per cent or 8 per cent ... in five years time if KiwiSaver returns are good then people might be encouraged to put more away."
Employers and Manufacturers Association (Northern) chief Alasdair Thompson was not worried by the plan to axe the employers' tax credit.
"Employers will find the removal of employer tax credits on their employees' KiwiSaver accounts not a big loss, given the simpler compliance regime envisaged."
