Dalziel Lianne: KiwiSaver Bill — First Reading 
Dalziel Lianne: KiwiSaver Bill — First Reading 
[Volume:629;Page:1678] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I am glad that nobody has to rely on that speech to understand what the KiwiSaver Bill is all about. I bought one of my nieces a piggy bank for Christmas because I thought it was important to get young children thinking about saving. That caused my sister and me to reflect on the days of the Post Office Savings Bank books that we all had as schoolchildren with the squirrel on the cover putting money away for the future. What a great message we had as children! I believe that KiwiSaver is about starting that message again—not with children but with the parents of those children to have them thinking about saving for the future. That is why I endorse the comments made by the Minister of Finance. Saving and investing are the foundation of the future wealth of New Zealanders as individuals and as a country. 
Although New Zealand superannuation provides a base level of income middle-income New Zealanders have to provide for their own savings to avoid a potentially significant drop in income during retirement. We had that fear factor all the way through National’s period in Government in the 1990s when it threatened every tenet of the Superannuation Fund that Michael Cullen had to establish in order to preserve our future. KiwiSaver helps people to change their long-term savings behaviour. KiwiSaver aims to increase the well-being and financial independence of individuals particularly in retirement. KiwiSaver is designed to complement New Zealand superannuation for those who wish to have more than a basic standard of living in retirement. 
I have been actively involved in the development of the KiwiSaver legislation that is before us today both as Minister of Commerce and Minister for Small Business. From my perspective as Minister of Commerce I see KiwiSaver as an important mechanism to help New Zealanders to save more for their retirement. It will also change the way that many superannuation schemes currently operate. In this way it will provide a real opportunity for scheme providers and strengthen the market for superannuation in New Zealand. I am surprised the National Party does not see the benefit in that. 
I appreciate that there are currently a number of effective employer-based superannuation schemes that employers choose to offer their employees and I commend the employers who have already taken active steps to assist their employees in their provision for retirement. We do not want to shut down those or any other current retail schemes with the introduction of KiwiSaver. Rather our objective is to enable them to continue to operate outside KiwiSaver or to facilitate their transition to the KiwiSaver environment. This is achieved through several provisions in the bill. An existing registered superannuation scheme will be able to fully convert to a KiwiSaver scheme with the consent of all of its members. Those members would then become members of the KiwiSaver initiative. A scheme can also partially convert to a KiwiSaver scheme by creating a KiwiSaver section within its current scheme. Members of the scheme can then decide whether to stay in the existing scheme or move to the new KiwiSaver section. Employers with existing registered superannuation schemes that meet minimum requirements can seek an exemption from the requirement to have their new employees automatically enrolled in KiwiSaver. Employers can also choose any registered KiwiSaver scheme to be the scheme that their employees are allocated if they decide not to make their own active investment choice. 
In the design of KiwiSaver we have also been concerned to reduce the risk of small balances occurring and when they do occur to minimise the impact of those small balances on KiwiSaver providers. That has been achieved through the Government making a $1000 upfront contribution to all KiwiSaver accounts the Government contributing towards each KiwiSaver member’s fees the requirement that members must contribute for a minimum of 12 months before they can take a contribution holiday and an exemption from the providers’ requirement to provide annual reports to members where a member’s account has been inactive for at least 2 years. 
Another important aspect of the framework for KiwiSaver products and providers is the protection of investors in KiwiSaver schemes. Where possible the bill has leveraged off existing regulatory systems to provide adequate disclosure and protections for investors. This includes ensuring that existing disclosure requirements in securities legislation apply effectively to KiwiSaver schemes and in particular ensuring that employees receive investment statements for the default scheme that they will be allocated before they are required to make a decision whether to opt out of KiwiSaver. 
Schemes will be regulated in an equivalent way to existing registered superannuation schemes but with additional KiwiSaver requirements such as lock-in of funds; permitted withdrawals for reasons such as housing serious financial hardship and permanent emigration; transferability between schemes; an independent trustee; and a requirement that fees not be unreasonable. And the Government Actuary will register and monitor KiwiSaver schemes on an ongoing basis. There will also be specific requirements for those KiwiSaver schemes that wish to be default schemes—schemes that employees are allocated by the Inland Revenue Department when they do not make their own choice of provider. Those schemes will be selected through a commercial tender process that will run alongside the legislative process. 
From my perspective as Minister for Small Business I have also been particularly concerned to ensure that KiwiSaver does not place unnecessary additional burdens on employers particularly small employers. KiwiSaver is primarily a scheme to facilitate work-based savings. That is because making deductions at source straight from wages—almost without people noticing them—is the simplest and most effective way for people to overcome their inertia and start to develop a savings habit. The introduction of a work-based savings scheme will however inevitably have some impact on employers. Various aspects of the design of the scheme have enabled us to minimise those impacts as much as possible while retaining the advantages of a work-based scheme. Information and payments that employers need to provide to the Inland Revenue Department will be transmitted through the existing PAYE scheme. The Inland Revenue Department will facilitate matching transactions between the member and the provider. For example there will be no need for employers to confirm an employee’s current KiwiSaver provider if he or she is an existing KiwiSaver member when starting a new job. The Inland Revenue Department will ensure that the contributions are sent to the correct provider. 
The legal risk for employers has been mitigated through provisions in the bill that clarify that an employer will not be liable as a promoter of a KiwiSaver scheme by simply complying with the Act or choosing a preferred KiwiSaver provider. Employers will also not be liable as investment advisers if they simply pass on factual information to employees about the KiwiSaver scheme. I was very concerned to ensure that the bill would not be an additional burden on small employers in my role as Minister for Small Business and I am very pleased that we were able to contribute to the design of the scheme in order to minimise the impact in that way. In addition—and I think it is worth remembering—a payroll subsidy has been made available to small businesses that use a payroll intermediary and that is something that will reduce some of the burden that the PAYE system imposes on small business and will thus also benefit those employers when KiwiSaver is implemented. 
We certainly have worked hard to achieve the idea of having an efficient and effective model for the implementation of KiwiSaver. Building long-term savings habits will be of benefit to all New Zealanders and KiwiSaver is an important part of the Government’s efforts to encourage these. I commend the bill to the House. I believe that it says a lot about a wonderful future for our nation because it is about encouraging the kinds of saving and investment that will take us into the future. I do not believe that anyone who does not take seriously saving and investment for the future of this country has our country’s interests at heart.