KEY POINTS:
National's proposed KiwiSaver changes have been well and truly analysed by now but one factor which doesn't appear to have been considered yet is the tight timeframe in which National are proposing to introduce the changes.
If elected they want to have the proposed changes in place by April 2009.
But that would leave less than two months once Parliament begins sitting next year for the legislation to be changed and for providers and the IRD to change their systems.
David Ireland, chairman of the Association of Superannuation funds, which represents workplace superannuation savings, says it's a "ridiculously short timeframe".
"April 1 is going to be tight, even if they can get the legislation through and passed in time."
Ireland says if National were elected it would ask them to delay the introduction of the changes by another six months.
"There is a lot of detail beyond National's policy that will need to be fleshed out in a short time."
Ireland said that detail would determine whether it was a headache or a migraine for the industry.
"Any change especially on top of everything that has happened to date is less than ideal."
But overall Ireland said National's proposed changes were reassuring for the industry in that they showed KiwiSaver was here to stay.
The proposal to drop the minimum contribution to 2 per cent was also positive because it created the opportunity for more people to get involved in KiwiSaver.
But it also brought with it problems as more members with small accounts created higher compliance costs for providers and reduced their ability to make money from the scheme.
COST TO BUSINESS
It's not just KiwiSaver providers who have to adapt every time there is a change. Employers have borne much of the compliance brunt of KiwiSaver without gaining the financial benefits that providers are expected to see over time.
A recent Business New Zealand-KPMG survey found KiwiSaver was the fastest growing compliance cost for businesses in the last year.
KPMG partner Paul Dunne said businesses had found the process of implementing KiwiSaver legislation highly complex.
"This is why it has steadily risen up the ranks of compliance concerns over recent surveys."
In the 2008 survey nearly half (48.5 per cent) of all respondents rated the Government's performance in minimising compliance required by KiwiSaver as fair or poor.
Dunne said respondents were generally dissatisfied with the Government's handling of the introduction of the scheme and had not been aware that they would ultimately bear the burden of compliance with the KiwiSaver legislation. "The purpose behind the scheme is clear but the consultation process was not."
Asked for their views on what should be done about KiwiSaver, respondents suggested abolishing it, making it compulsory in order to reduce compliance by business, or having a settling-in period with no further changes.
But that seems highly unlikely with the election on the horizon.
"We have a general election only weeks away with the potential for even more tinkering with KiwiSaver on the horizon; the one thing that remains constant is continual change and adaptation. The more the rules change, the more that compliance costs impact on business," Dunne said.
POLITICAL HOT POTATO
Not all are impressed by KiwiSaver becoming such a big political policy driver.
Susan St John, Auckland University senior economics lecturer and co-director of the Retirement Policy and Research Centre, says while changes are needed to KiwiSaver, doing it via the election process is not the right way to go about it.
"Retirement income policy should not be made by vote-seeking politicians under pressure."
Many have likened the recent KiwiSaver situation to 1975 when Labour set up a compulsory superannuation scheme only to have it scrapped 37 weeks later when Prime Minister Robert Muldoon came into power.
The 1980s were then characterised by the surcharge fight and successive changes in government saw major upheavals in New Zealand's superannuation savings landscape until 1993, when a multi-party accord was signed to give more stability to pension policy.
St John said there needed to be another accord for KiwiSaver to enable it to be reviewed without being used as a political hot potato.
"It's dangerous what is happening. The average person out there is not feeling very confident at all."
TAX CREDITS ON TIME
Some KiwiSaver investors have become frustrated by the delays in receiving their $1043 tax credit from Inland Revenue.
KiwiSaver providers have been to apply for the tax credits from July 1 but many investors are only now seeing the money appear in their KiwiSaver accounts.
Inland Revenue has to process the request within 30 days so many investors had expected the money to be in their accounts by August or September at the latest.
But ING general manager marketing and client services Steven Giannoulis says most providers would not have been able to apply for the tax credit until some time after July 1 as providers had to wait to receive further information on payments to the IRD to ensure they took into account all the payments made up until June 30 in order to claim for the right amount.
ING began applying for tax credits at the end of August and finished the process around September 12.
Giannoulis said it had received all tax credits within the 30 day application period.
A spokeswoman for the IRD said applications from providers had been arriving gradually since July but claims from two large providers were still outstanding, which meant they had yet to be processed by the IRD.
"All claims received from scheme providers have been processed within 30 working days."
Up to September 30, $259.3 million in member tax credits had been paid to scheme providers.
NOT SO EASY
KiwiSaver's impact on other retirement savings schemes has already been noted by market observers and one scheme which has felt the hit is ASB's Easyplan.
The scheme has lost more than 1600 members in the last year alone dropping from 14,132 to 13,189 (taking into account the 709 new members) in the year to March 2008.
Like other superannuation schemes it has been hit hard by the market downturn.
According to the scheme's annual report its growth fund was down a whopping 10.98 per cent in the year to March 31, while its balanced fund was down 7.21 per cent and the conservative fund dropped by 1 per cent. The only fund to grow was the cash-enhanced fund which was up by 4.45 per cent.
Investors are likely to see similar results in their KiwiSaver funds although some providers have bucked the trend.
The result has seen the scheme effectively wipe out its after-tax profits for the previous year, going from a profit of $22.166 million in 2007 to a loss of $22.305 million in 2008.
