Labour has confirmed it will make KiwiSaver compulsory – without details and with exceptions:
. . . Under Labour’s policy, all employees not already in the scheme would be automatically enrolled on October 1 next year. Students and beneficiaries would be exempt.
Low income earners would also be exempt – but the details of the minimum threshold will be subject to consultation, Mr Cunliffe said.
The elephant in the KiwiSaver room that no-one mentions is that in a few decades there will be significant inequality amongst retirees – those with KiwiSaver and those without.
The poor are least likely to have KiwiSaver accounts and making it compulsory for everyone else will merely compound that.
Labour expects auto-enrolment would bring a further half a million people into the scheme.
“Most of those are low income earners who are missing out on getting their fair share of government contributions”, Mr Cunliffe told reporters at Parliament this morning.
“These workers will have higher incomes after Labour raises the minimum wage and the ramp up of their employee contribution will be slower.” . . .
Raising the minimum wage will do little for most people because any increase will be cancelled out by reductions in Working for Families and other assistance such as accommodation supplements.
Increasing employer contributions will also have a depressing impact on wages and job opportunities and also threaten job stability.
Adding costs to employment without increasing productivity would mean businesses would have to charge more for whatever they sell which would flow through to inflation.
The alternative would be to absorb the cost which would reduce profits. That in turn could threaten viability and would reduce their ability to invest more in their business and their staff.
This policy would leave most workers with left in their pay packets – without Labour’s other daft idea of altering KiwiSaver rates to control inflation.
Saving is good, but many people would be better paying off a mortgage or other debt than putting more in KiwiSaver.
But the worst of this policy is, like so many others of labour’s – is its vagueness. Once more the party shows it doesn’t do details.
Spin doctors don’t do numbers, but the Treasury secondee the party sacked would have.
A policy without details isn’t really a policy, it’s just a vague idea of what the party might or might not do should it get into government.