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KiwiSaver Will Increase Inequality In Elderly - Research

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Jan 28 NZPA - KiwiSaver will increase inequality and
benefit the wealthy, according to research conducted at Waikato
University.

Over 380,000 people have joined KiwiSaver to take advantage of
tax-breaks and a $1000 kick-start payment.

Professor John Gibson, of the Waikato University Management
School, said NZ Super helped to "equalise lifetime incomes" while
KiwiSaver did the opposite.

"What's having the biggest impact (on inequality) is the
generous taxpayer incentives provided to KiwiSaver members and in
particular the exemption from Specified Superannuation Contribution
Withholding Tax," Prof Gibson said.

He said because these were not capped, but were calculated as a
percentage of income, higher earners received more benefit.

"While non-earners and the self-employed don't benefit at all."

According to Prof Gibson's research, over 45 percent of the
working age population earn below $30,000, but will get just 15
percent of KiwiSaver tax incentives.

The 11 percent of the working age population who earn over
$70,000 will receive 18 percent of KiwiSaver tax incentives.

Women, Maori and Pacific Islanders and those without
qualifications would get a much smaller share than white, educated
males, Prof Gibson said.

"You have to ask if that is a fair use of taxpayers' money."

Prof Gibson also said KiwiSaver had not inspired new saving but
rather a "reshuffling" of existing savings.

The research was based on a mail survey in December. About 1600
surveys were sent out and 598 completed and returned.

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