Business New Zealand says Labour Party plans to make KiwiSaver compulsory and increase employer contributions to 7% will be counter-productive in the long run.
[image:3512:third:right]On Thursday, Labour introduced the idea into its election policy, along with plans to gradually raise the age of eligibility for superanuation from 65 to 67 as a way of boosting savings.
It would make KiwiSaver compulsory for all workers from 2014, keeping the minimum contribution from workers at 2%, while gradually lifting employers' contributions to 7% by 2022.
The Council of Trade Unions supports the KiwiSaver moves, but Business New Zealand chief executive Phil O'Reilly fears Labour's plan will not work.
"Over time, the employee will pay for this - business will take it into account in setting wages and terms and conditions.
"In reality, what you're going to see is upfront some pain for businesses as they have to pay for this compulsory cost and then paying for employees because they eventually will be the ones who'll wear it because it will be taken into account on their wages."
