Employers don't like Kiwisaver, but will live with it

A major employers group says it does not like the Government's flagship Kiwisaver legislation, but has "rolled over on it".

Employer 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".

The Kiwisaver Bill is being examined by a select committee and its first day of public hearings resulted in a mixture of mild criticism and warm support.

Mr Thompson said he did not believe Kiwisaver would increase net savings, it would not have high participation rates and 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.

Mr 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 action was needed.

The $1000 incentive to join the scheme should be increased and MPs should examine options to allow employer contributions, he said.

Mr Wilson suggested any cuts to company tax could be offset to pay for employer contributions to workers' retirement savings.

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.

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

- NZPA