Changes aim to give Kiwis greater control over their funds
The government is set to undertake a number of KiwiSaver reviews, with its Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill awaiting a select committee report prior to its second reading later this month.
The Bill proposes a number of changes, including adding new contribution rates of 6% and 10%, setting annual tax rates for the 2018-2019 tax year and allowing New Zealanders over 65 to join a KiwiSaver scheme, where employers would not be obliged to contribute but could do so voluntarily.
Other areas of focus will include getting more lower-income New Zealanders into the scheme, and Minister of Commerce and Consumer Affairs Kris Faafoi has expressed interest in reviewing KiwiSaver’s approach to those of limited life expectancy, and their options for withdrawing their money earlier.
AUT finance lecturer Ayesha Scott says the minimum contribution rate needs to be raised above 3%, with Massey University’s Claire Matthews stating that there should be more flexibility in terms of how much people choose to put in. AUT’s KiwiSaver study, conducted last year, also pointed to a number of issues pertaining to product disclosure statements, which Scott said needed to present information in a clearer and more accessible way.
“We definitely feel the format needs to be changed to make it easier for KiwiSaver investors to compare across providers,” Scott told NZ Adviser at the time. “We think the documents could be changed in terms of their layout and how they’re organised. There’s a lot of KiwiSaver information in the documents that’s common to all KiwiSaver providers, and we found that people have a hard time distinguishing between information that’s unique to a provider, and information that’s common to all of them. The common information should probably be pulled out and provided separately.”
“People are really interested in making informed decisions around KiwiSaver, but they’re not sure how to go about that because they find it hard to access the information that they need to make that decision,” she added.
Contribution rate changes are expected to come into force in April, and over-65s will be given KiwiSaver access from July.
