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KiwiSaver Introduced in July 2007, KiwiSaver establishes
KiwiSaver is similar in many respects to other countries' retirement savings plans (for example, the Canada Pension Plan). It is government-sponsored, paid out in old age and paid only to those who have contributed, the amount depending on the individual's personal investment.
Unlike most overseas retirement plans, KiwiSaver is partly state-funded. And although KiwiSaver is not compulsory for employees, contributions from employers became mandatory from 1 April 2008.
The Chief Executive of the Ministry of Social Development has determined - wrongly, in our opinion - that other countries' second-tier retirement plans have like contingencies with NZ Super and therefore warrant deductions from NZ Super entitlements. If the law were to be applied equally and fairly, NZ Super should also be deducted on account of KiwiSaver payments.
However, if the Chief Executive treated KiwiSaver in the same manner as overseas pension plans, the public would have rejected KiwiSaver. For this reason, amounts saved in KiwiSaver are paid in addition to full NZ Super: "KiwiSaver is designed to complement NZ Super" (Dr Cullen).
New Zealanders working overseas are denied participation in KiwiSaver. If they save for their retirement in government-sponsored programs while working overseas, those savings translate into deductions from their NZ Super entitlements if and when they return to and retire in
New Zealanders who stay home and pay into KiwiSaver do not face the same penalties. This disparity exposes the duplicity of the government's common argument, "New Zealanders who have had the opportunity to work overseas should not be advantaged over those who have stayed home."
By exempting KiwiSaver from section 70, the government has established a situation which no one can convincingly argue is not discriminatory.
Dr Cullen has confirmed that, under current law, KiwiSaver will continue to be exempted from the direct deduction policy. The term "under current law" leaves the way open for the government to change its mind at any future date. Meanwhile, politicians and bureaucrats are scrambling to establish, unconvincingly, that KiwiSaver does not have like contingencies with overseas pensions subject to section 70.
Dr Cullen, for example, argues that KiwiSaver cannot be likened to overseas pensions because KiwiSaver "is not government-protected". Social Development Minister Ruth Dyson goes one better. Her justification in July 2008 hung on a single qualifying adjective: other countries' employment-based schemes were to remain subject to section 70 because they, unlike KiwiSaver, are "overseas" pensions!
Prior to the introduction of KiwiSaver, Dr Cullen warned, "We depend too much on the savings of foreigners." His words contain a bitter irony for Kiwis whose savings the New Zealand government continues to plunder.
Does this discrimination concern you?
Email or write to your local MP and others. Ask them to explain why overseas equivalents of KiwiSaver reduce NZ Super entitlement when KiwiSaver income has no such effect - and ask what they are doing to right this injustice.
View MPs' contact details and click on an email address to automatically create an email.
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Last modified: August 22, 2008 |
