Tamsyn Parker: A devil in National's detail

Page 1 of 2 View as a single page 4:00AM Tuesday Oct 14, 2008
By Tamsyn Parker

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."