Exempt employer provisions – sunset clause

Clause 532

Submission

(67 – New Zealand Institute of Chartered Accountants)

There should be no general limitation on superannuation schemes (clause 532) as this restricts genuine employers from setting up schemes with possibly better benefits for employees. Rather, legislation should target specific employers who abuse the rules.

Comment

The proposed provision does not impose a general limitation on employers setting up superannuation schemes for their employees. The amendment is to deal with a concern that a number of employers are establishing superannuation schemes that qualify as an exempt employer scheme for the apparent purpose of avoiding the automatic enrolment rules of KiwiSaver. Under the KiwiSaver Act an employer is not required to automatically enrol new employees into KiwiSaver if they are registered as an exempt employer. This provision was introduced to reduce the compliance costs on employers that already had superannuation schemes in place that met the requirements of the exempt employer rules when KiwiSaver was introduced.

This undermines the policy intent of the automatic enrolment rules of KiwiSaver and the rationale for the exempt employer rules.

Recommendation

That the submission be declined.