National 'open to considering' end to total remuneration pay

National says phasing out total remuneration packages is not part of the policy it announced at the weekend, but it is open to considering it.

National revealed its plans to make KiwiSaver compulsory, enrol kids from birth with a $1500 kickstart and require employer contributions to continue for people who are working past 65.

But providers said the issue of total remuneration has to be tackled as part of that.

Someone who was paid via a total remuneration package paid both their own KiwiSaver contribution and that of their employer out of a total amount allocated for their salary.

It means that, at the moment, they take home 7 percent less than they would if they opted out of KiwiSaver.

Under National's plan to increase the combined contribution to 12 percent, they could end up having to cover a much larger amount.

Many KiwiSaver providers and the former Retirement Commissioner have called for total remuneration to be banned, saying that it is against the spirit of the scheme.

It has been estimated that about half of employers are using a total remuneration approach for at least some of their employees. Of those, 25 percent use total remuneration packages for all employees.

Responding to a request from RNZ on Monday, a spokesperson for leader Christopher Luxon said: "Phasing out total remuneration packages is not part of the policy National announced [on Monday], but we are open to considering it."

Koura Wealth founder Rupert Carlyon said total remuneration packages would have to go if KiwiSaver was being made compulsory and contributions were being pushed up.

It could mean people paying another 5 percent of their salary into their accounts.

"Internationally, they've used incentives and tax breaks for everyone to contribute to superannuation to make people feel good about it. Here we're just saying there's no real incentive. It's just, you have to do it, which I'm not 100 percent convinced is the right answer because it starts looking like a tax right?"

Pie Funds chief executive Ana-Marie Lockyer said she wanted more clarification on how compulsory KiwiSaver contributions would interact with total remuneration.

"As KiwiSaver moves toward a compulsory model, which is a feature of most successful retirement systems such as Australia, Singapore, understanding how employer contributions will be treated within remuneration packages will be important for both employers and employees.

"In addition, the principle of helping more people save is sound, but the implementation details around hardship exemptions, contribution suspensions and support for lower-income households will be important to get right."

Booster chief executive Diana Papadopoulos had a similar concern.

"The issue of total remuneration arrangements needs to be addressed. If they're not used appropriately it can have a really negative impact on people who will miss out on the contributions they deserve."

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