More changes for KiwiSaver, says English

Finance Minister Bill English says KiwiSaver changes will include making simplyfing the 'opt out' rules and what happens after a member's death. Photo / Rotorua Daily Post.

More tweaking is planned for KiwiSaver, Finance Minister Bill English told superannuation fund managers today.

At an Association of Superannuation Funds of New Zealand forum in Wellington, English reiterated that the Government did not intend making drastic changes to the Labour-initiated KiwiSaver scheme.

"But there are a few minor ones we want to make to reduce compliance issues ..." he said.

The Government has already cut the minimum contribution rate, but there was potential to simplify rules for those wanting to opt out of the scheme, saving compliance costs for employers.

Tax issues were also being investigated and moves were under way to simplify the release of KiwiSaver funds after a member's death.

English said there were also questions as to whether investment profiles of default funds should be changed to give more flexibility to invest in growth assets.

The scheme remains popular, with 30,000 new members still signing up each month and total membership at the end of July being 1.1 million.

Government had so far contributed $840 million, with employer and member contributions at $1.2 billion.

Meanwhile, plans to allow the transfer of super funds between New Zealand and Australia are advanced, but cannot be enacted until legislation is passed.

"We expect that may be by around the middle of next year," English said.

He said it was questionable whether New Zealanders' money in Australian funds would be better off staying there, but the amount likely to flow from that country would be beneficial to the superannuation industry here.

In regard to tax reform, English said most developed countries would increase taxes over the next 10 years "because their public finances are in a mess much worse than ours".

He said New Zealand wanted to avoid having to follow suit.

"One of the ways we can come out of this stronger is to come out of it without putting our tax burden up."

However, better tax efficiencies were needed and that was the subject of the review.

New Zealanders were warned about the potential cost of reverting back to their old ways of spending, something which could promote rising house prices and prompt a false recovery from the recession.

"What we need is less debt and more investment in the productive part of the economy."

Tax was "one lever to pull to tilt the playing field" to where it needed to be for the economy to recover comfortably.

Despite spending fears, English said he believed New Zealanders now understood the importance of saving, which was likely to be good for the superannuation industry.

NZPA