Tremain Chris: KiwiSaver Bill — In Committee 
Tremain Chris: KiwiSaver Bill — In Committee 
[Volume:633;Page:4946] 
CHRIS TREMAIN (National—Napier) 
: 
 I would like to focus on Part 5 particularly in relation to clause 182 “No Crown guarantee of KiwiSaver schemes or products” clause 183 “Factual description of or transmission of information about KiwiSaver scheme not investment advice” and clause 184 “Application of Securities Act 1978”. I would also like to touch on clause 194 “Regulations”. 
The reason I do that is I want to focus on some of the submissions that came into the Finance and Expenditure Committee led by Shane Jones who is across the Chamber. We are certainly looking forward to his taking a call later on this evening. The submissions focus on a number of issues in regard to the financial advice that new members of KiwiSaver will need to seek. The submissions pointed out three things. The first was that the current level of financial literacy in New Zealand is relatively low. I think that all of us would accept that the average guy in the street when faced with making a decision about this will have some difficulties and will need to look for some advice. I think even the Minister of Finance would acknowledge that. 
The second point that came through from the submissions was that the KiwiSaver information pack should direct an employee to seek financial advice. That is the point I want to dwell on particularly in regard to employers and their responsibility in regard to the provision of advice to employees under this Act. Whether or not we like it employees will be faced with a number of decisions in regard to this legislation. A new employee will need to decide whether to opt out of the scheme or to stay in it. Existing employees will need to decide whether to participate in the KiwiSaver scheme. Employees will need to make decisions about mortgage diversion about contributions holidays and about which is the best scheme in terms of the risk profile that will attribute to them. Employees face significant financial decisions and given the fact that submitters to the Finance and Expenditure Committee made it clear that the current level of financial literacy in New Zealand is relatively low I am concerned about whether the implementation of the bill will cover the shortfall that I see. 
And there is a shortfall because at the end of the day it will be employers at the coalface who largely will be faced with helping employees to make these decisions whether or not we like it. It does not matter how thick a submission an employee receives or what default provider applications are put in front of them or how much financial advice they have most employees trust their employers—the guys who employ them—and will go to them to make a decision. 
That is where clauses 182 183 and 184 become very important. In particular clause 182(1) points out: “There is no Crown guarantee in respect of any KiwiSaver scheme …”. That means it is important that employees make a sensible decision about their risk profile going forward. Clause 183 points out that a factual description of or transmission of information about a KiwiSaver scheme is not investment advice. Clause 183 states: “For the avoidance of doubt the Crown or any other person does not give investment advice for the purposes of the Investment Advisers (Disclosure) Act …”. Why have I dwelt on that point? It is because the Government is trying to say here that firstly the Crown is not responsible but that secondly any other person is not responsible. So at the end of the day the decision rests with the employee fair and square. I want Dr Cullen the Minister in the chair to take a call and let us know where that point will be specifically mentioned in the applications put in front of employees so that employees do truly understand when they go to their employers to ask them to help with a decision that their employer is not responsible for the decision that is made. 
That point is spelt out in clause 184 “Application of Securities Act 1978” in subclause (1) which states: “A person is not a promoter”—and I thank the officials for helping me with this point—“or issuer in relation to an interest in a KiwiSaver scheme for the purposes …”. The legislation states there that an employer cannot be held out as a promoter. That is a very important point because if an employer was held out as a promoter then that employer could be held liable in terms of any advice given to an employee.