Work-based super schemes key to saving, Cullen says

Michael Cullen

Strong work-based superannuation schemes will underpin a savings strategy to be announced in next month's budget, Finance Minister Michael Cullen says.

He said today he would present a package designed to facilitate rather than coerce people to save.

"We believe the workplace is the ideal context in which most New Zealanders can arrange long-term savings," he said in a speech prepared for the Banker and Investment Forum in Tauranga.

"You can expect a set of measures aimed at rebuilding strong work-based superannuation schemes.

"There will be a number of mechanisms through which the Government will encourage participation among employees and minimise the transaction costs for employers."

Dr Cullen said he was moving to "resolve the anomalies" in the taxation of savings that were identified in a report released last September.

He also signalled new ways to help people buy their first homes as part of a savings strategy.

The Government introduced a mortgage insurance pilot in September 2004 as a first step toward assisting people into homes.

"We are looking at further cost-effective ways of assisting home ownership among New Zealanders who would otherwise struggle to get these important first runs on the savings board," he said.

Dr Cullen said he did not see any of the measures he had outlined as a magic bullet.

"Rather they are a set of converging forces, some of which may prove more significant than others, but all of which should encourage a greater awareness of savings."

He said New Zealand had one of the lowest rates of domestic savings in the OECD, and it was becoming increasingly important to improve it.

- NZPA