A recent intriguing survey unveils that nearly half of the employers in New Zealand may be skirting the intended purpose of the KiwiSaver legislation by paying their staff's retirement contributions within their total wages, rather than on top of earnings. The study, conducted by the Te Ara Ahunga Ora Retirement Commission, surveyed over 300 diverse organizations, discovering that a striking 45% employed a total remuneration approach for at least some employees.
According to the KiwiSaver Act, employers must contribute a minimum of 3% of an employee's gross pay on top of their wages if the employee is a contributing member to the scheme. However, the Te Ara Ahunga Ora Retirement Commission's Dr. Suzy Morrissey questions whether the widespread use of total remuneration packages is truly in line with good faith bargaining practices, as stipulated in the legislation.
The survey revealed that 60% of respondents using a total remuneration approach found it simpler from an accounting standpoint, while 21% candidly admitted it was a cost-saving measure. A notable 25% of employers always included employer KiwiSaver contributions as part of total remuneration, and an additional 20% utilized both approaches for different employees. Dr. Morrissey observed that when workplaces employed mixed approaches, disparities among employees' benefits arose, particularly affecting non-managerial staff.
With approximately 96% of New Zealand's working-age population, or over three million people, enrolled in the KiwiSaver scheme, it's important to scrutinize these practices. The Commission's findings also highlight that nearly 39% of KiwiSaver members are not currently contributing to their accounts, further complicating the retirement landscape.
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