Union warns of multibillion-dollar hit from National's KiwiSaver pledge

The Public Service Association has taken aim at National's KiwiSaver policy, claiming it carries a multibillion-dollar hidden cost for schools, hospitals and other public services.

But National denies that, saying the extra cost to the Crown of increasing employer contributions would be met from future budgets with careful planning.

At its annual conference last month, National promised, if re-elected, to make KiwiSaver compulsory from July 2028 and steadily lift both employee and employer contribution rates to 6 percent by 2032.

The Public Service Association (PSA) told RNZ that National had not been upfront about the true cost of the pledge.

PSA national secretary Fleur Fitzsimons, a former Labour candidate, said National had budgeted only for the cost of enrolling workers not currently in KiwiSaver, not for the higher employer contributions required for those already in the scheme.

"It is irresponsible and a dereliction of duty not to properly fund election promises," Fitzsimons said. "We need to see transparency from this government about what public, community and health services they'll cut in order to fill this hole."

The union released its own analysis, calculating the "unfunded extra costs" at $4.5 billion over the five-year transition period from 2028 to 2033, based on Treasury wage forecasts and assuming a flat headcount.

Fitzsimons said agencies would be left to absorb those costs through cuts and job losses.

"This isn't chicken feed," she said. "There's no $4.5 billion money pot just sitting around."

Approached for a response, National's finance spokesperson Nicola Willis said departments would be expected to plan for the higher employer contributions.

"While in some cases these may lead to additional costs, these will be partially offset by increases in employer superannuation tax contributions," she said.

"The additional cost will be able to be met from within future budgets so long as the government continues to carefully prioritise public money."

Willis also said it was "disappointing" the union was not backing workers' desire to grow their KiwiSaver balances faster.

"I'm surprised the PSA doesn't see providing its members with greater financial security in retirement as a priority. National does."

When the government announced its initial KiwiSaver changes at the 2025 Budget, Treasury estimated employers would offset around 80 percent of that cost through lower-than-expected pay rises.

The PSA's claim comes amid increased scrutiny of spending promises by all parties ahead of the election. Willis last month accused Labour of having an $18.2b "hidden bill" in its policy offerings.