OPINION: Ruth Richardson: National’s KiwiSaver plan double-charges workers

It matters little whether the law says the employee pays half and the employer pays half. Employers hire on total labour cost.

So the worker is hit twice.

First, take-home pay falls. Earnings are carved off, locked away, and still taxed. The grocery bill, mortgage, and power bill do not wait until retirement.

Second, that same worker remains on the hook for rising NZ Super costs and the post-Covid spending blowout, which has continued. The state is saying: save for yourself because Super is unsustainable, but keep paying for it as though nothing has changed.

The policy punishes earners now and leaves them shouldering an unsustainable public super scheme. That is double taxation.

At the Taxpayers’ Union, the mantra is simple: no payroll tax without compensation. Even compulsory KiwiSaver supporters should demand a slimmed-down NZ Super ‒ or a slimmed-down state.

This is orthodox. When GST was introduced, and later increased, it was paired with tax cuts.

While reasonable minds differ on compulsion, the gaping hole in National’s KiwiSaver policy is the missing quid pro quo for workers whose wages are to be raided.

Mandating a 12% retirement contribution demands cutting other taxes. That means getting the spending addiction under control. Anything less is a raid on working households dressed up as prudence.

And if compulsory KiwiSaver becomes the default retirement pillar, NZ Super must change too. That means lifting the age of eligibility and indexing Super to inflation like other benefits, not letting it ratchet upward regardless of taxpayers’ capacity to pay.

Nicola Willis has said these are “separate conversations”. Another fudge.

The compulsory savings argument assumes the state knows the right savings rate for every New Zealander. It assumes a planner, or an official formula, understands each person’s debt, health, family responsibilities, risk appetite, mortgage position, and investment opportunities better than they do.

For one family, the wisest investment may be paying down the mortgage. For another, building a business. For a young worker, training, tools, or moving for a better job.

KiwiSaver has its place. But encouraging savings and forcing them are very different. Choice matters. Property rights matter. The right to steward your own earnings matters.

There is another risk. Once politicians force money into vast funds, they will be tempted to fiddle: “strategic investment”, “nation building”, “green transition”, or whatever slogan captures the ministerial imagination. Compulsory savings create not just retirement accounts, but a honey pot for political direction.

Fund managers will do nicely. Bureaucrats will have new levers. Politicians will have new speeches. But the wage earner will have less control over their own pay packet.

New Zealand needs retirement reform. But reform must begin with fiscal discipline.

If politicians believe NZ Super is unsustainable, they should change it. If they believe workers should be forced to save 12% of wages, they should cut other taxes to compensate. What they must not do is impose compulsory KiwiSaver while leaving taxpayer-funded Super untouched.

That is not courage. It is double charging the same worker for the same promise.

New Zealanders do not need saving from themselves. They need saving from a state that refuses to live within its means.