Fletcher Building to support Kiwisaver

By NZPA

Thursday 11th May 2006

Fletcher Building is encouraging its 10,000 New Zealand workers to sign up for the Government's Kiwisaver superannuation scheme.

The country's biggest building products and construction firm said yesterday workers who made a minimum payment into the scheme of 4% of their annual salary would get a 2% top-up from the company.

Fletcher Building's outgoing chief executive, Ralph Waters, said the top-up would cost the firm between $1.5 million and $4 million a year.

"We think it is a smart plan and should encourage people to participate," he said following a media briefing to announce his retirement.

Kiwisaver is a voluntary workplace scheme giving individuals personalised superannuation accounts that they can transfer from job-to-job.

New employees will be enrolled automatically but will be given six weeks to opt out.

The Kiwisaver Bill is currently being examined by a parliamentary select committee and had its first day of public hearings yesterday - attracting a mixture of mild criticism and warm support.

Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson told MPs he did not think the workplace savings scheme would work but "it was not worth dying in a ditch over".

He did not believe Kiwisaver would increase net savings or have very high participation rates, and that it would increase compliance costs.

He told MPs they should change the bill so employers did not have to nominate which savings scheme package an employee should belong to, as that was a matter for the employee or the Government to decide.

Thompson also wanted employers to have fewer reporting responsibilities to Inland Revenue who would manage much of the scheme.

Union bosses were far more welcoming of the legislation.

Council of Trade Unions president Ross Wilson said his organisation saw it as a good "platform" for increasing savings but more was needed.

The $1000 incentive to join the scheme should be increased and MPs should examine options to "facilitate" employer contributions.

If the Government did plan cuts to company tax, this saving for employers could be offset to pay for employer contributions to employees' retirement savings.

Wilson and other union representatives making submissions supported offering employees a lower rate of saving to make it more affordable for low income people.

Finance Minister Michael Cullen is pushing the saving scheme as a partial answer to New Zealand's low rate of savings, pressures on retirement income and a way to help people into their first home.

Announced in last year's budget, the savings scheme is meant to be up and running by April 2007.

Cullen has forecast that 25% of the workforce, or around 350,000 people, would be in a Kiwisaver scheme within five years.

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