Hypocrisy on retirement savings

Business New Zealand has pointed out that the compulsory employer contributions to KiwiSaver was the worst political ambush of business in 20 years, with no consultation at all. To quote Phil O’Reilly:

Employers had been willing to support a workplace savings scheme if it had been “compliance light” and based on “no-surprise” consultation.

This had changed on Budget day when employers were lumbered with the compulsory contributions and the risk of administering the scheme.

“Clearly, ambush trumps consensus.”

Finance Minister Michael Cullen had called for consensus around retirement issues, but this clearly did not include employers.

O’Reilly also points out some of the practical issues:

Employers would have to negotiate different wage rises for different employees based on whether they were in the scheme or not.

Mr O’Reilly said this would cause tension in the workplace, especially if someone negotiated a pay rise on the basis they were not in KiwiSaver and then afterwards joined up.

This would mean that person had gained a larger wage rise than their colleagues.

The bill should be amended so that any required employer contribution should be recognised as part a total employment package whether or not the employee joined KiwiSaver.

The recommendation is sensible.  One might be able to achieve that with an explicit employment agreement, but it would be better to have specific legislative provision for it.