|
Posted: 5 Aug 2008
New Zealand’s recently introduced superannuation scheme, KiwiSaver, has just celebrated its first birthday with an announcement that 770,000 people have opted in over the year. This is a stunning answer to the doomsayers who made earlier predictions about a lack of interest and low uptake from “savings resistant” New Zealanders.
The Government sponsored, work based scheme, is voluntary and relatively flexible, It is assisted by the Government with a $1000.00 kick start, a tax credit of up to $1,042.86 per year, and a fee subsidy. A first home deposit is also available to those who qualify. KiwiSaver is open to all New Zealand citizens and people entitled to be in New Zealand indefinitely who are under the age of eligibility for New Zealand Superannuation (currently age 65).
From 1 July 2007, when KiwiSaver, started, all employers have been required to automatically enrol their new employees in KiwiSaver, unless the employer already provided access to compliant superannuation schemes or the employee was exempt from automatic enrolment. All new employees will have contributions deducted from their first pay in their new job and can decide whether to continue to contribute or opt out of KiwiSaver from the end of week two until the end of week eight in this new job. If any employee opts out, any contributions that were made will be refunded (by either the employer or Inland Revenue). Those who choose to opt in to KiwiSaver cannot opt out at a later date. However, anyone can apply for a contributions holiday after 12 months. From 1 April 2008 employers are obliged to contribute to the scheme for all employees who have opted in. Employer contributions are to be phased in from 1% in the first year building to 4% in year four. A tax credit of up to $20.00 per employee per week is available to employers to help with reimbursement of their contributions. Contributions over and above the statutory contribution are optional.
Judging by the rapid uptake the scheme is obviously appealing to the work force and employers have an opportunity to encourage participation at minimal costs to themselves, an attractive addition to the value proposition for both employer and staff. Providing information on KiwiSaver opportunities to real estate salespeople who are independent contractors would also be an important adjunct to agencies’. “Wealth Creation” programmes. A user friendly IRD web site provides full information for employers http://www.ird.govt.nz/kiwisaver/
New Zealanders have had a reputation as poor savers but the outstanding success of this scheme suggests that people are willing to save for their retirement when accompanying benefits provide sufficient motivation. For more information please contact Graham Crews
|
