Today’s press conference in Auckland came after the party announced its first election policy over the weekend: a promise to lift the default KiwiSaver contribution to 6%, which, when matched with the employer contribution – which would also rise to 6% – will mean the default contribution to KiwiSaver is 12%.
This contribution matches the rate of Australian superannuation, although there, the employer picks up the full tab.
The change will be phased in, hiking the 3% default rate by 0.5 percentage points a year until it reaches 6% in 2032.
The contribution increase to the total of 12% by 2032, including the employer contribution of 6%, will overtake the rise to 4%, set out in this year’s Budget.
Luxon said under the changes, a 21-year-old earning $65,000 a year today would retire with a KiwiSaver balance of about $1.4 million, about $400,000 more than they would earn under the settings outlined in the most recent Budget.
“If you’re a New Zealander who does the right thing by working hard and saving for the future, you deserve to get ahead. National backs you every step of the way,” Luxon said.
The changes will come at a cost to the Government. As the Government is the largest employer in the country, it would be on the hook for an additional $90m a year for each of the 0.5-percentage-point increases in contribution rates.
National says government departments would need to find this money from their existing baselines, which would put further pressure on public service funding.
The party said some funding for the cost pressures would be “met from future Budget allowances, if required”.
People will still be able to opt out of KiwiSaver if they choose, or to contribute at a lower rate if they wish. The bottom 3% rate will remain, if people choose it.
