22 Oct 2013

Finance lobbyist wants KiwiSaver incentives axed

7:53 am on 22 October 2013

The Financial Services Council says it believes the Government and other political parties are seriously considering its proposal to restructure the incentives for people to invest in KiwiSaver.

At present the Government pays $1000 to every new KiwiSaver accountholder and 50 cents for every dollar invested in a KiwiSaver account each year, up to a maximum of $521.

The council suggests the Government instead use that money to reduce the amount it taxes KiwiSaver contributions and any investment earnings.

A report the council commissioned found the effective tax rate on KiwiSaver funds is 38% while the effective tax rate of British superannuation funds is negative 40% and is negative 30% on Australian funds.

Council chief executive Peter Neilson says it isn't realistic to expect New Zealand's Government to match British and Australian superannuation tax policy.

Mr Neilson says the criticism of the fees fund managers charge for managing Kiwisaver accounts from New Zealand First Party leader Winston Peters is unwarranted.

He says New Zealand management fees are lower than Australia's and there's clear evidence KiwiSaver management businesses are not worth a great deal.