five ideas from her office’s 2019 review of retirement income policies are to be considered in the review. It included re-targeting “the government contribution to incentivise voluntary contributions to KiwiSaver by non-employees”.
Each KiwiSaver member who contributes at least $1042 to their accounts each year are paid a government contribution of up to $521 annually. For anyone who saves less than that, credit is paid at a rate of 50c for each dollar saved. This has meant that everyone earning over $40,000 and contributing 3 per cent of their income would qualify for the full amount. However, the review commissioned by the Commerce and Consumer Affairs Minister is considering if it would be better to pay the government contribution only when workers make additional, voluntary contributions to KiwiSaver.
The Retirement Commission, to which Wrightson joined in 2020, is of the view that the government contribution is perceived by workers as an entitlement, instead of an incentive. And since most employees would continue to contribute to KiwiSaver even if the government contribution was removed, and still get their employer KiwiSaver contributions as a result, it would be better to only pay government contributions on voluntary contributions made into KiwiSaver accounts. The commission pointed out that this would encourage ordinary workers to save more, since they would not earn government contributions on contributions deducted from their wages, but could still earn them by making extra, voluntary payments.
According to Minister Clark, said no decision had been made yet on whether KiwiSaver would undergo any changes, but added: “It is around 14 years since KiwiSaver was introduced and so it is an appropriate time to review settings to ensure they are fit for purpose.”
