Savings inquiry timely 17.8.10

The CTU says that it is timely to have an inquiry into savings.

Peter Conway, CTU Secretary, says “the CTU has not made a firm decision in favour of compulsory savings but we are discussing a 10% savings option”.

This option would involve:

• Compulsory employer contributions of 6 percent phased in over 4 years
• Compulsory employee contribution 2 percent once employer contributions reach 6%
• Government top-up of 2 percent
• Ensure any inquiry  addresses equity issues, such as those resulting from lower pay rates and lifetime incomes of women. Also consider beneficiaries and non-working parents receiving a government contribution in lieu of the employer contribution

Peter Conway said that any Inquiry would need to canvas a wide range of views and analyse both advantages and disadvantages. He said unions would be very concerned about any potential effect on universal superannuation payments at age 65 years and the impact on low income workers being required to save.

Peter Conway says’ “we note that in Australia, the national superannuation scheme is of lower value, but employers are compulsorily required to pay 9% superannuation contributions”.

“It is timely to look at savings again in the context of our high current account deficit. The investment income deficit wipes out any gains from goods and services and is due to repatriation of profits to offshore owners of many NZ-based firms and overseas borrowing by banks to fund household mortgages. We need to investigate how to build on KiwiSaver to establish domestic savings vehicles such as KiwiBonds or other options.”

For further information contact:
 
Peter Conway, Secretary, CTU
04 802 3816 / 027 493 9748