Mallard spins himself out over KiwiSaver

Media statement Friday, July 25th, 2008

Mallard spins himself out over KiwiSaver

Labour Minister Trevor Mallard's claim that employers are pocketing the tax credits of their employees is a total fabrication because they can't, the Employers & Manufacturers Association (Northern) says.

"Employers cannot pocket the tax credit," said Alasdair Thompson, EMA's chief executive.

"Employers can only get tax credits for KiwiSaver if they make employer contributions to the KiwiSaver accounts of their staff. If they don't make contributions they can't get tax credits.

"The tax credits are given to employers to help cover the cost of making their one per cent contributions into the KiwiSaver accounts of their staff.

"There is no way they can get the tax credits otherwise. For Mr Mallard to say they can is wrong.

"The tax credit for employers of up to $20 a week is at the same level as the government makes to employees' KiwiSaver accounts, and the same rules apply; neither employers nor employees get any tax credits if they don't contribute to KiwiSaver.

"If an employer did deduct a contribution to KiwiSaver from an employee, that would amount to a unilateral reduction in the employee's pay and it's illegal under existing employment law.

"EMA is strongly opposed to that, but we have seen no evidence any employers are doing it. If they have, or try to, they stand to be accountable under the existing law.

"Most employers are doing what the law requires. Many are going beyond the statutory minimum.

"The negotiation specifically provided for in the KiwiSaver legislation is as Dr Cullen said: 'The government expects that the phase in of compulsory matching employer contributions will be taken into account in wage and salary bargaining.'

"Some employers have made pay offers in the following terms: 'Here is a pay rise of five per cent. Those in Kiwisaver will get four per cent in cash less tax, plus one per cent tax free as the employer's contribution to your Kiwisaver account. Those not in KiwiSaver will get five per cent less tax.'

"In that way employees in the scheme and those not in it are kept on the same increased total remuneration, but employers cannot make decisions such as this unilaterally. They have to be agreed between employer and employee. Employment law requires this and so does the KiwiSaver Act.

"But there is no need for new legislation to address this, unless the government wants to discriminate against those not in Kiwisaver. That is what Mallard's law would do by requiring those in the scheme to be paid more in total remuneration than those not in the scheme.

"Eventually those unable to afford to be in KiwiSaver would be paid four per cent less. It's not fair, it's discriminatory, and the reason we are campaigning against it."

ENDS

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