Latest / Best of Business / Murray Harris: Milford Asset Management KiwiSaver general manager on ACT's planned changes for KiwiSaver

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Murray Harris: Milford Asset Management KiwiSaver general manager on ACT's planned changes for KiwiSaver · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
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• 0:16
  Speaker 2: What do we make of or do we read much
• 0:18
  Speaker 2: into this Act KiwiSaver policy? Investment earnings would be tax-free,
• 0:21
  Speaker 2: so that sounds good, doesn't it? The claim being a
• 0:23
  Speaker 2: 25-year-old nurse would be $ 217, 000 better off. Flip side is
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  Speaker 2: the government contributions would be scrapped. Now Murray Harris is
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  Speaker 2: GM of KiwiSaver at Milford Asset Management and is with
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  Speaker 2: us this Monday morning. Murray, morning to you.
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  Speaker 1: Morning, Mike.
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  Speaker 2: So this is, would you call this revolutionary given that
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  Speaker 2: lots of places already do it?
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  Speaker 1: Well, it is. It's really aligning us with some of
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  Speaker 1: the best retirement saving systems around the world. I mean,
• 0:48
  Speaker 1: the UK, Canada, you don't pay tax on your investment earnings.
• 0:52
  Speaker 1: In Australia, it's concessional. It's between 10% and 15%. We
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  Speaker 1: do have a concessional tax rate here already on our
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  Speaker 1: KiwiSaver accounts. And in fact, all PI funds or portfolio
• 1:02
  Speaker 1: investment entities at a maximum of 28%. But this does
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  Speaker 1: really move the dial in terms of long-term savings in
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  Speaker 1: something like KiwiSaver. You remove that 28% tax. And no
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  Speaker 1: matter what your income or what size your account is,
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  Speaker 1: you're going to benefit from that because for every $ 1, 000
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  Speaker 1: of investment earnings You generate, that's $ 280 that's not being
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  Speaker 1: paid away to the government in tax.
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  Speaker 2: Exactly. So why don't we do it?
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  Speaker 1: Well, and that's the good thing about this announcement. It's
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  Speaker 1: another announcement alongside National's announcement, Labour's announcement. KiwiSaver, this really
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  Speaker 1: has become the KiwiSaver election, which is great to see
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  Speaker 1: because we do need a stronger retirement savings system. We
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  Speaker 1: know New Zealand super isn't affordable in its current format.
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  Speaker 1: And so KiwiSaver is going to have to do more
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  Speaker 1: of the heavy lifting. And so if we can encourage
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  Speaker 1: people to save more and give them a benefit and
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  Speaker 1: an incentive to do that, then that's got to be
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  Speaker 1: a good thing.
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  Speaker 2: It also gets government out because you can't rely on government,
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  Speaker 2: as history shows us, when it comes to contributions, can you?
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  Speaker 1: Well, this is why we need a cross-party accord or
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  Speaker 1: agreement on the long-term KiwiSaver settings so that we don't
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  Speaker 1: get governments coming in and changing the rules every three
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  Speaker 1: years or every budget day and that the KiwiSaver members
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  Speaker 1: can have confidence in the system. They know what the
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  Speaker 1: rules are. They can then work with those and contribute
• 2:22
  Speaker 1: long-term benefits. set up their retirement savings without knowing there's
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  Speaker 1: going to be changes because if we change the rules
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  Speaker 1: or we make it too confusing, people disengage and then
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  Speaker 1: they'll stop saving. So a long-term plan with one set
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  Speaker 1: of rules that aren't changed by progressive governments and people
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  Speaker 1: can just get on with saving for their retirement.
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  Speaker 2: Well said, Murray. Appreciate it, Murray Harris. I will ask Luxon, obviously.
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  Speaker 2: I don't think Luxon's going to live with it. which
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  Speaker 2: you will need to because this is, yet again, no
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  Speaker 2: bottom line from ACT because no one has any bottom
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  Speaker 2: lines with the possible reception of the Opportunities Party whose
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  Speaker 2: bottom lines were so embarrassing we burst out laughing.