Compulsory retirement savings 'unrealistic' | Wairarapa News | Local News in Wairarapa

Government moves toward compulsory retirement savings will
ultimately savage the day-to-day lives of  people on low incomes,
says a Masterton budget advisor.

Compulsory KiwiSaver is being tipped as a likely area of focus for
a Savings Working Group the Government is establishing to
 address the dismal national saving rate and New Zealand's
skyrocketing debt.

Employers today must contribute 2 per cent of a worker's gross
pay for members of the voluntary KiwiSaver scheme, while under
Australia's compulsory superannuation scheme, the employer
contribution is 9 per cent.

Grant Howard, Wairarapa Free Budget Advisory Service manager,
said low income earners would already be struggling with a 2 per
cent compulsory savings scheme without ``sacrificing basics like
bread and milk'' without considering the 2.5 per cent increase in
GST that comes into effect in October.

``Never mind not being able to invest in business like some have
been touting _ for low income earners come October, it will be all
about just feeding their kids, and feeding themselves,'' he said.

``These people won't have money to invest, not even 2 per
cent of their average wage, when they'd be down half a per cent
already after October. For low income earners it's ridiculous and
absolutely unrealistic.''

Peter Conway, Council of  Trade Unions secretary, said yes
terday his organisation was ``discussing a 10 per cent savings
option'' that included beneficiaries and non-working parents
receiving a government contribution in lieu of an employer contribution.

Mr Conway said unions ``would be very concerned'' about any potential effect on universal superannuation payments at age 65 years and the impact on low
income workers being required to save.

Prime Minister John Key has ruled out any changes to national
superannuation or the age of eligibility and entitlement levels.