The private member’s bill, introduced last month by Labour backbencher Dr Tracey McLellan, aims to restore some financial protections originally given to KiwiSaver members by the Employment Relations Act 2000.
That was amended by the National government’s Employment Relations Amendment Act 2008, resulting in employers not being legally required to offer the same terms or benefits to KiwiSaver members as non-members.
Under current legislation, employers are not legally obliged to offer workers enrolled in KiwiSaver the same terms of employment, salary or wages, conditions of work, fringe benefits, or opportunities for training and promotion and transfer, as a worker not enrolled in the scheme. Employers can also offset pay increases against workers’ KiwiSaver contributions.
These settings could potentially disadvantage New Zealanders saving for their retirement, as they expose KiwiSaver members to potential discrimination due to their membership, meaning they may receive lesser protections than people who are not members of KiwiSaver.
The new bill aims to ensure workers can’t be discriminated against because they are members of a KiwiSaver scheme or a complying superannuation fund. It also aims to achieve more equal employment relations conditions for KiwiSaver members as those who do not belong to the scheme.
McLellan, who is MP for Banks Peninsula, says there are numerous examples of employees being offered, for example, $60,000 in wages but it turns out to include the employer contribution to KiwiSaver.
At its first reading in parliament, the bill enjoyed wide support on both sides of the house with109 ‘ayes’ and 10 ‘noes,’ all from the the Act party.
Earlier this year the Retirement Commission surveyed more than 300 small, medium, and large organisations about the use of a total remuneration approach to KiwiSaver and found that 45% use the model for at least some employees.
It found 25% of employers included employer KiwiSaver contributions as part of total remuneration. A further 20% adopted both approaches, paying some employees earnings plus KiwiSaver, and others earnings inclusive of KiwiSaver.
Retirement Commissioner Jane Wrightson said it was disappointing and not how KiwiSaver was designed to operate, “...as the legislation clearly states that compulsory contributions must be paid on top of gross salary or wages except to the extent that parties otherwise agree. However it is not prohibited as long as the outcome is the result of good faith bargaining.”
With the election roughly one month away if McLellan is not re-elected or doesn’t get through on the list, she is number 27, the bill may still survive if it is picked up by one of her colleagues. Submissions close on October 30.
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