CTU MEDIA RELEASE

09 October 2008

National’s KiwiSaver cuts double what is reported

“Further reading of National’s economic management plan shows alongside National’s plans to cut employer contributions to 2 per cent and abolish the employer tax credit, it will also cut the government contribution (member tax credit) to 2 per cent, leaving many workers earning under $52,000 much worse off.”

“While somebody on an income of over $52,000 would still attract the full current $1,040 government contribution, because National have reduced the minimum contribution rate to 2 per cent, they have also said they will cut the government contribution to this minimum rate also.”

“So a worker on $30,000 a year contributing 4% to KiwiSaver will lose $440 a year from the member tax credits, plus the employer contribution would be reduced to 2 per cent – which sees them losing another $600 a year. These workers would be worse off by $20 a week.”

“In addition, National are misrepresenting the union position on KiwiSaver. Unions did not want a 2+2 option that removes employer tax credits. That will make it much harder to persuade employers to contribute more than 2% and will also mean that some employers will put pressure on workers to fund the employer contribution out of a wage increase.”

“Unions also support a 4 per cent supported option for workers who choose it, and recognise that hundreds of thousands already have, and will be hugely disadvantaged if National implements their changes.”

ENDS

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