Select Committee Against Bill to Limit Use of KiwiSaver as Part of Pay Package

Highlights:

1. KiwiSaver Protections: The Employment Relations (Protection of KiwiSaver Members) Amendment Bill aims to restore financial protections for KiwiSaver members that were removed by the National government in 2008.
2. Current Employer Practices: Employers are not legally required to offer the same terms, salary, or benefits to KiwiSaver members as non-members. They can also offset pay increases against workers’ KiwiSaver contributions.
3. Committee’s Stance: Despite initial support, the Finance and Expenditure Committee does not believe the bill should be passed, with disagreement from the National, Act, and New Zealand First parties.

Overview

The Finance and Expenditure Committee has expressed its opposition to the Employment Relations (Protection of KiwiSaver Members) Amendment Bill, which aims to restrict employers from including KiwiSaver contributions as part of an employee's total remuneration.

Background of the Bill

Introduced by Labour backbencher Dr. Tracey McLellan, the bill seeks to restore protections for KiwiSaver members that were initially provided by the Employment Relations Act 2000 but subsequently removed by the National government’s Employment Relations Amendment Act 2008. Presently, employers are not obligated to offer the same terms and benefits to KiwiSaver members as non-members and can include

KiwiSaver contributions as part of an employee’s overall pay package

Initial Support and Committee's Stance

The bill enjoyed significant support during its first reading in Parliament, receiving 109 votes in favor and 10 against from the Act party. However, after select committee hearings, the Finance and Expenditure Committee reported that most of its members do not support the bill’s passage. The committee unanimously recommended some changes to enhance the bill's workability, but the majority still opposed it.

Opposition from Political Parties

The National, Act, and New Zealand First parties have voiced their disagreement with the bill. The National Party argues that the bill could introduce uncertainty for employers by adding new grounds for personal grievances, complicating existing employment relationships, and imposing additional hurdles for businesses under the Employment Relations Act.

Retirement Commission's View

Retirement Commissioner Jane Wrightson criticized the committee's report, describing it as Orwellian. The Retirement Commission, which was among the 14 parties that made submissions on the bill, supports the legislation. The Commission argues that the total remuneration approach contradicts the spirit of KiwiSaver, which is designed to encourage long-term saving with employer support. According to their findings, 45% of surveyed organizations use the total remuneration model, with 25% including employer KiwiSaver contributions as part of total remuneration.

Conclusion

Despite its initial support, the Employment Relations (Protection of KiwiSaver Members) Amendment Bill faces significant opposition from the Finance and Expenditure Committee and major political parties, casting doubt on its future in Parliament. The debate highlights the ongoing conflict between protecting employee benefits and managing employer obligations.

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