Up to a million people who are in work but have not yet joined KiwiSaver may be automatically enrolled in the savings scheme under a plan being considered by the Government.
Under the current rules those who start a new job are enrolled and then have the choice to leave.
But the proposed "soft compulsion" option would sign up all those who have not changed jobs since the scheme started, so have never faced the choice of staying in or opting out.
Officials estimate that up to a million savers could potentially be signed up under the auto-enrolment option, sending the Government a bill of $1 billion just for the $1000 "kickstart" for each account.
There are 1.75 million people in KiwiSaver now but another 250,000 have opted out of the scheme.
But it is likely the opt-out rate would be much higher under an auto-enrolment plan, perhaps as high as 40 per cent to 50 per cent.
Prime Minister John Key said the change would be outlined in a discussion paper due to be made public in the next few weeks.
Mr Key said it was in New Zealand's interest to have as many people in KiwiSaver as possible.
"The Government is looking at how we can auto-enrol those people who are in the workforce but currently not in KiwiSaver," he said. The Government's Savings Working Group had looked at compulsion but had shied away.
"They rejected it on the basis that it wouldn't necessarily suit every person's circumstances. Low-income people might find it quite challenging to go in there ..." Mr Key said.
Enrolling more people in the scheme may not lift national savings, because they may save less in other areas.
The Government announced in the May Budget it would look at the working group's call for "a one-off enrolment exercise" and discuss with employers how it could be done without unnecessary compliance and administrative costs.
Labour leader Phil Goff said his party was looking at ways to create a more "universal savings scheme", but he refused to give details.
KiwiSaver had been universally available, but not universally taken up, he said.
There were problems extending it to everyone, because many people did not have spare cash to put into savings.
"There are a whole lot of New Zealanders that are struggling just to meet the day-to-day bills, that actually don't have the ability to put money aside for savings."
Labour is expected to announce a detailed savings policy as a key plank in its election campaign.
- © Fairfax NZ News
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