By Alex Tarrant
Labour will make KiwiSaver compulsory for all workers from 2014 if it wins the November 26 election, and push up employer contributions from 3% to 7% by 2022, leader Phil Goff announced today.
Releasing the party's savings policy, Goff said Labour would also restart contributions to the Superannuation Fund in 2012/13 - before the government books are forecast to be in surplus - and raise the retirement age by two months a year between 2020 and 2033 from 65 to 67.
The policy comes after the government announced earlier this month it would look to enroll all workers not in KiwiSaver into the scheme in 2014/15, although this was subject to the books being in surplus and those automatically enrolled would have the option to opt out.
Labour went a step further by saying KiwiSaver would be universal for all wage and salary earners.
Goff said employer contributions to their employees' KiwiSaver schemes would be hiked by 0.5% a year from 3% in 2014 to 7% in 2022 - a move that would bring New Zealand closer to the Australian savings scheme, where employers contribute the equivalent of 12% of their employees' pay to their saving scheme.
Goff said employees would still contribute 2% of their wages to KiwiSaver, and that would not rise as many families were struggling with rising costs of living.
Labour said it would take on a Savings Working Group recommendation to spread the NZ$1,000 kick-start payment for new KiwiSavers over five years - NZ$200 a year - to spread out the upfront cost to the government from new enrollments.
"By making it easier to save, everyone in the scheme will have a nest egg to supplement their pension and give them a secure retirement," Goff said.
"Universal KiwiSaver also reduces our reliance on foreign borrowing and builds up on our pool of savings to invest in Kiwi businesses and create jobs. We will be able to own our own future, and grow our economy - not someone elses," he said.
Resume Super Fund contributions
Labour said it would resume Super Fund contributions with a NZ$750 million payment in 2012/13, and ramp that up to NZ$2.4 billion by 2016. Goff told a media conference he was comfortable resuming contributions before the government's books were in surplus - meaning the government would have to borrow funds in order to make contributions to the fund.
Goff said he was confident the Super fund would be able to deliver higher returns than the interest rates that government would be paying on its borrowings.
See BusinessDesk's Pattrick Smellie's piece, Opinion: BusinessDesk's Pattrick Smellie says Labour is seeking the moral high ground with its new pension policy
(Updates Doubleshot with David Cunliffe, with video)
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