National's proposal to make KiwiSaver compulsory has a gap: workers with both a salary job and self-employed income have no clarity on whether they must contribute on both.
National's proposal to make KiwiSaver compulsory for all workers has a practical gap the party has not yet filled: what happens to the growing number of New Zealanders who earn money both as employees and as sole traders or self-employed contractors?
The party's finance spokesperson Nicola Willis said at National's annual conference that the expectation is everyone working will have a KiwiSaver account they contribute to, including the self-employed. For sole traders, National's policy document states they would contribute at the employee rate of 4%, not the combined 8% (employer plus employee), according to interest.co.nz.
But when pressed on whether a salaried worker who also runs a side hustle earning $5,000 a year would need to contribute 4% on that self-employed income, Willis said the detailed arrangements for specific circumstances would have to be worked through if National is re-elected in November.
"We'll expect them to make a contribution to a KiwiSaver scheme but not to make the employer contribution as well as the employee contribution," Willis said. "We're not expecting people to have multiple KiwiSaver accounts and multiple contribution arrangements."
A nuance problem for the self-employed
The chief executive of digital accounting service Hnry, James Fuller, told interest.co.nz that National's 4% figure for sole traders glosses over the diversity of the self-employed workforce. Some sole traders earn money both as employees and from their own business — and how contributions would work for that group is unclear.
"In the past, some of those people would have chosen not to contribute to KiwiSaver through their side hustle because they already had sufficient coverage from their salary job," Fuller said. "That lack of nuance, that lack of detail, is what's causing quite a bit of confusion, where people are a little unsure as to what this means."
National's revenue spokesperson Simon Watts said the party needed to work through the mechanics of how compulsory contributions would operate for self-employed people, according to interest.co.nz. Self-employed people already contribute to KiwiSaver voluntarily, he noted — the change is simply that contributions would become mandatory rather than optional.
National leader Christopher Luxon has said the 4% rate for self-employed people — half the standard combined rate — represents a fair and reasonable ask.
Total remuneration packages also in the mix
National has also flagged it needs to consult with employers about how compulsory KiwiSaver would interact with existing employment agreements, including those structured as total remuneration packages. Those arrangements bundle the employer's KiwiSaver contribution into an employee's salary, meaning both employer and employee portions come out of what is effectively the worker's pay.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.