'Govt likely to cut KiwiSaver contributions'

Investing

Likelihood of Govt cutting KiwiSaver contributions increasing, NBR says. Your view?

3rd Dec 10, 10:16am by Alex Tarrant

It is becoming increasingly likely the Government will cut state KiwiSaver contributions as it looks to get its books under control, the NBR reports this morning.

NBR journalist Rob Hosking cites papers from Finance Minister Bill English's advisor Paul Dyer obtained under the Official Information Act as saying government contributions to KiwiSaver increase government "dis-saving".

This comes as the Government looks to get its own spending under control and lift the overall savings level in New Zealand. The Government-appointed Savings Working Group has indicated the earliest savings would come from the public sector if government reduced spending and reversed its deficit.

Government currently pays NZ$1,000 into every new Kiwisaver account, and then matches annual contributions up to NZ$1,042 a year.

(Updates with links, government payments)

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21 Comments

by Nicholas Arrand | 3rd Dec 10, 10:44am 1291326296

And replace it with....an increased compulsory employer contribution? Say ,to match the 12% that the country that we are trying to catch is going to....Maybe we could stagger the start at 5% and increase it slowly. A good way of giving every worker a Clayton's payrise that doesn't feed through into consumption.

by 28_29 yr old | 3rd Dec 10, 7:46pm 1291358772

hahahaha

Nic, you obviously don't own a business that employs staff, that suggestion would kill businesses

by muzza | 3rd Dec 10, 11:23am 1291328598

Steady on Nicholas, a compulsory employer contribution?? Are you going to ask employers about that one?

by steven | 3rd Dec 10, 12:20pm 1291332012

So we are meant to catch OZ, but we cherry pick the "best bits" of any policy that suits the 1% of the country? Oh I get it.....what Brash meant was the top 1% of NZers will be able to catch the top 1% of Ozzies in the timescale if we do this....meanwhile screwing over the other 99% of NZers.

Lets get real here.....

1) Im listening to good and highly skilled NZ professionals/workers who are eyeing not only the better pay in OZ but the compulsory schemes as a package.

2) We give too much air time to the extreme right wing nutters who frankly have brought the world's financial system to the edge of the abyss just so that that top 1% can get as rich as they were in 1928 before the First Great Depression....and watched from their ivory towers while millions suffered through that Depression...

3) Do read up on the Great Depression but especially the 1920s leading up to it, the over exuberence for no work but financial gain speculation is eeirly reminiscent of today....this one however looks far far worse.

4) Study the economic impact of Peak oil, this will have the biggest effect on the World's economy bar nothing else.....it has the potential to put us in the Second Great Depression if the useless sods mentioned above dont get us there first......it will guarantee that with no cheap energy there will be no economic recovery....assets of virtually every class are valued on the assumption that there will be cheap and abundant energy and good consumer employment and spending......none of these apply after Peak Oil.....

regards

by steven | 3rd Dec 10, 12:01pm 1291330865

NBR, Act mouth piece

Paul Dyer, a very successful chap - "Super funds investment chief axed after $860m income drop"

Nuff said really....

regards

by RDee | 3rd Dec 10, 12:24pm 1291332260

That'd be right. Glad I got in and grabbed the money right at the start. The Nat government was always going to knock this on the head.

by Gummy Bear Hero | 3rd Dec 10, 12:52pm 1291333966

Anyone heard some scuttlebutt from the US-of-A that the retirement age may be gradually increased to 69 years ?

by Christov | 3rd Dec 10, 1:12pm 1291335159

GBH...go....http://www.financialstandard.com.au/news/view/30933/

by Gummy Bear Hero | 3rd Dec 10, 1:24pm 1291335892

Cheers , Count : ......

..... But 68 by 2050 , and 69 years by 2075 ............ The majority of the babyboomers will be dead by then ( sorry , guys ! ) ........... So what's the freaking point of raising the retirement age ! .......... Are the good folk on that commission BB's , by chance ?

by Wolly | 3rd Dec 10, 5:42pm 1291351362

Sigh...I will try once again....govt would not need to provide a savers subsidy paid for by taxpayers if govt brought an end to the landlord rent subsidy and tax deduction on interest scams which keep property prices high and means peasant families need to either pay heaps in rent or heaps in mortgage dosh to the banks........families would have more income left over on lower rentals and lower mortgage payments...and so they would be able to save more...and spend more....creating or saving more jobs...reducing the govt unemployment and other benefit costs....boosting the tax revenue take....closing the fiscal hole..........................

But I must not go on.....it upsets some people so.....I must make peace with the hole.

by Gummy Bear Hero | 3rd Dec 10, 5:48pm 1291351716

No ! Please go on ........... Bugger the silly sods who rail against Wolly's views , aren't there 3 trillion other websites for them to tune in to ? ................ You vent your spleen buddy , there's more than a few of us who feel the same as you do ............

by Fred | 3rd Dec 10, 6:09pm 1291352947

Ahh Wolly it's all a dastardly plot see here http://www.thedailybell.com/1571/It-Is-an-Anglo-American-World.html  . . . lots of good reading in this thread, decided on my Christmas reading from one of the links . . . http://www.amazon.com/God-Gold-Britain-America-Making/dp/0375414037 but it's not at the bookshop, so Amazon it is.

Wait and see, if the banks flush with cash from their sales of covered bonds start a new push . . . . soft start loans and advertising . . . . No worries though, if no one borrows the money guess they will just have to pay it out in bonuses for the clever folks that sell the things.

by muzza | 4th Dec 10, 3:15pm 1291428923

Ring fence business investments, not just property investments, so any negative gearing will be of no use. It may result in a large number of people not being able to get a business up and running though. As for the accommodation allowance to help the poorer class people, scrap that but offer more Housing Corp places- suspect many PI's don't want to deal with this class of tenants anyway (a bit harsh but true).

The best way to close the fiscal hole is to alter the biggest handout of all, the national super, but no point in simply means testing as that would create a bigger disincentive for people to prepare for retirement. That could work couldn't it? But....

by Rob | 3rd Dec 10, 6:20pm 1291353638

If the gov cuts the 1,042 a year contribution, then for self employed people, there will be no point in staying in it. I hope if they plan to do that, that people will be able to withdraw their funds early, and invest it in their own scheme. They should allow this, becuase it is essentially changing the rules mid way in the game. They have already removed the subsidy that pays the fees, so if they also remove the 1042 subsidy, people who decide not to continue to contribute may end up with with their savings slowly being eroded due to fees, depending on what scheme they are in.

Certainly removing it, will mean that many people won't bother to save, which is the wrong message

by Wolly | 3rd Dec 10, 7:10pm 1291356646

Who's a silly boy then Rob....you know the rules...govt can change any part of the deal they want and Noddy peasant is left to stew...but when Noddy peasant wants to change the rules....hell no...rules is rules especially appropriate for fools.

The Kiwisaver subsidy will be removed on fiscal grounds...some sort of garbage reason will be scripped for English....but the rental subsidy...and the tax allowance on interest...these two shall remain...for they are two of the legs propping up the system...and we know how important the system is....to the banks.....and the pollys...and we know why!

by Kate | 3rd Dec 10, 7:48pm 1291358893

Totally agree.

by Kakapo | 3rd Dec 10, 7:12pm 1291356740

Five minutes ago they were wringing their hands over NZers not saving enough, starving businesses of capital and to the long-term detriment of the economy, and now they're considering removing one of the few incentives. Good thinking, guys. Is some kind of halfway coherent plan too much to ask?

Anyway, how many people are there in kiwisaver, at a max of $1,042 a year? I think it was 400,000 last I heard. That's nothing. It's pure theatre.

by Wolly | 3rd Dec 10, 7:15pm 1291356951

Kakapo.......I hate to rain on your.......the "incentive" you speak of, is coming out of the peasant's left pocket, deftly stolen as tax...and then handed over as an incentive to the peasant who is expected to smile and glow with pleasure at being loved so much by govt...and it goes into the only other pocket!.....Pollys one...peasant nil....Always keep your eye on the pea!

by Kakapo | 3rd Dec 10, 7:26pm 1291357616

Course it is. But in the absence of anything else remotely like an incentive it's a counterproductive move.

by LOL | 3rd Dec 10, 7:35pm 1291358103

So it appears that opting-out was the sensible thing to do.

by Fairfax O Rouke | 6th Dec 10, 11:32am 1291588332

Or it may have been sensible to opt in and grab the money when you could.

Wollys inane ramblings are making sense today for once.