KEY POINTS:
Kiwisaver will not be used as a tool by employers to flatten pay rates, the architect of the scheme, Dr Michael Cullen, said last night.
Cullen's superannuation plan kicks off today, amid some confusion as critics suggest employers could use it in wage negotiations to hold down the pay of new employees.
David Wilson, the director of the Institute of Public Policy at AUT says there is the short- to medium-term potential for employee salaries to be flattened during initial negotiations as would-be bosses look to offset the costs of increasing employer contributions against basic salary increases further down the line.
He believes employees will be at the mercy of employers as a bargaining game of quid pro quo develops. And he said the level at which companies pay into the scheme could be a flashpoint for all employees.
"Employee loyalty may be tested over how much the company puts into KiwiSaver to begin with."
Companies have to contribute 1 per cent of wages to the scheme from April next year but some have committed to a full 4 per cent from the introduction of KiwiSaver.
But Cullen said superannuation schemes had "always been a treasured part" of the bargaining process and he did not believe staff would rush from one employer to another, shopping around for the best savings.
He said Kiwis now had the chance to "save in the long term and provide some security in their retirement". They would need to think carefully about where they invested but "they now have a great opportunity".
David Wilson believed one other big positive is that investment could be diverted away from the housing market and ploughed back into the New Zealand economy, which "would without doubt be a good thing".
- NZPA
