The elephant in the room: Compulsion

Compulsory super is being suggested, again.

I agree with Kiwiblog’s first statement that compulsory super is bad policy – but then he states:

However KiwiSaver is close to de facto compulsory as it is opt out, and the subsidies are so great you have to be very poor or very stupid not to take them up.

Serious, what the frik.

It is opt out, because it wants to “change the framing” of saving, in order to see if people have a framing issue with savings.  However, they messed any potential for using this as a test for framing by epically subsidising the scheme – subsidies which are inefficient and generally unfair.

I wouldn’t use the dumb subsidises in Kiwisaver as any sort of argument for compulsion.

Trust me, if we are about to get into a debate on the merits of compulsory superannuation there is going to be a lot of “against” posts on this blog – lets hope we don’t go there.

Update:  An anti-compulsion post on Policy Progress that is worth flicking over.

1 reply
  1. Matthew
    Matthew says:

    Well I agree that opt-out has nothing to do with compulsion. But the subsidies make the current system part way along a continuum towards compulsion. I’m not saying this is an argument for compulsion, but it is a fact that the subsidies of the current system put us part of the way along that road.

    In fact given the level of negativity associated with compulsory super in this country (eg Winstons referendum) I was surprised there wasn’t more resistance to the subsidies when they were introduced.

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