Workers told to use savings schemes

The Government and employers have been urged to help New Zealanders have retirement savings deducted from their pay packet.

Retirement Commissioner Diana Crossan said this week the number of people with workplace retirement savings has fallen to "concerning levels" and the Government and business community needed to act.

Crossan said workplace saving was one of the most effective ways to make financial provision for retirement.

"The Government needs to make it easier for businesses, and businesses need to commit to helping their staff," she said.

Saving through the workplace could be one of the easiest and effective ways for people to save, as it took savings directly out of pay before people are tempted to spend it.

"The number of people now participating in employer saving schemes has fallen from 20 per cent in the late 1990s, to 13.6 per cent," Crossan said.

"We need to make it easier for employers to offer savings schemes to their staff in the first place.

"There are compliance costs that act as a disincentive to employers who obviously need to be more focused on running their business than dealing with the complexities of providing schemes," she said.

The Retirement Commission is working with Business New Zealand, the Council of Trade Unions, the Investment Savings and Insurances Association, and the Association of Superannuation Funds of New Zealand, to look at ways of encouraging workplace saving.

This includes measures such as reducing disadvantageous tax rates employees on low incomes experience when contributing to a super scheme.

Crossan said the issue is also high on the agenda for the Periodic Report Group, which will report to Government in December.

"Despite these issues employers need to be aware that there are some simple ways they can provide their staff with access to savings schemes run by others," she said.

To employees, her message is clear : "If your employer offers you access to a scheme in your workplace definitely check it out. Even if you're in a job for a short time, being in a workplace scheme can be worthwhile, especially if your employer offers a top-up or pays the fees.

"Like any other investment or saving decision you make, you need to find out as much as you can about your company super scheme before deciding whether it's the best option for you," she said.

"The Retirement Commission's website has information to help both employers and employees make saving decisions."

- NZPA

Herald Feature: Retirement

Related links

Further reading: nzherald.co.nz/employment