The retirement fortunes of Kiwi and Australian workers widened yesterday when Australia increased compulsory employer contributions to the superannuation fund to 12 per cent – compared to 2 per cent in New Zealand.
The boosting of the Australian retirement scheme could increase the brain drain across the Tasman, commentators have warned.
The increase from 9 per cent, to be phased in by 2019, would add an extra $137,000 to the retirement fund of the average 30-year-old male Aussie worker.
It would also boost Australia’s $1.6 trillion pool of retirement savings.
Financial commentator Bernard Hickey said the Federal Government’s commitment would provide a big boost for Australian workers.
He said Australia already had a \”turbo-charged\” superannuation scheme, which had turned the country’s capital markets into an \”all conquering monster\”.
Adding another 3 per cent to employer contributions would have the power to increase the brain drain that already sucked many Kiwis across the Tasman, Hickey said.
\”Many New Zealanders who have worked [in Australia] have money in the superannuation scheme and they love it because it gives them some savings, whereas in New Zealand they probably don’t have savings.\”
Hickey said the Australian Government’s move to increase employer contributions to superannuation should \”spark a debate\” about whether or not New Zealand needed to make its KiwiSaver scheme compulsory.
Thomas Pippos, a managing tax partner with consultancy firm Deloitte, said the suggestion that Kiwis would flock across the Tasman because of the increased super contributions was \”not an accurate joining of the dots\”.
It was just one of a range of factors that could increase the brain drain.
Martin Lewington, chief executive of fund management firm Mercer New Zealand, said New Zealand would fall further behind Australia in terms of workplace savings.
\”The fact remains that New Zealand’s population is ageing as quickly as Australia’s, and in fact the potential cost per capita of funding an ageing population in New Zealand may be greater due to our Government-provided pension being available to all New Zealanders no matter what their income or savings base,\” he said.
GROWING GAP
AUSTRALIA
* By 2019 all employees will have 12 per cent of their salary paid into their superannuation account by employers.
* The Government will extend the superannuation guarantee to workers who are aged between 70 and 75.
NEW ZEALAND
* Under KiwiSaver, employers pay the first 2 per cent of salaries and no contribution tax is applied.
* Employers can only pay into KiwiSaver until age 65.
By Christopher Adams
Reference: http://www.nzherald.co.nz/employment/news/article.cfm?c_id=11&objectid=10642595
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