KiwiSaver providers have criticised a National Party policy that would allow people to access up to $20,000 of their KiwiSaver to start a new business.
Leader of the opposition Judith Collins said KiwiSaver was money that people had “put aside for a rainy day” and they should have a choice whether they invested it with fund managers or in their own business.
KiwiSaver is a voluntary retirement savings scheme where New Zealanders over the age of 18 contribute between 3 per cent to 10 per cent of their salary to a fund of their choice.
Rupert Carlyon, founder and managing director of KiwiSaver fund provider Kōura, said National’s proposed policy was a bad idea and “kind of scary”.
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“I think it’s nuts,” Carlyon said.
KiwiSaver was supposed to be a safe and secure back up plan for retirement, he said.
“It’s not sitting there to fund everything else in life.
“Putting up more and more ways to get your money out just means people are going to have less and less money in retirement.”
Using KiwiSaver to start a business was a high-risk proposition, due to chances of the business failing, he said.
Also, people who started a business were less likely to contribute part of their salary to KiwiSaver, he said.
Furthermore, not only would the person have $20,000 less in their KiwiSaver, but they would also lose the investment return on that amount – which, for a 40-year-old starting a business, would be about $47,000.
“It’s actually more like a $67,000 withdrawal.”
Milford Asset Management head of KiwiSaver Murray Harris said it was dangerous for politicians to view KiwiSaver as a “rainy day fund” that New Zealanders could tap into.
“Its sole purpose and intention was for New Zealanders to save towards their retirement, and we shouldn’t lose sight of that,” Harris said.
If policy allowed KiwiSaver members to keep “dipping into the honey pot” then many New Zealanders would find themselves without enough money to live on in retirement and end up needing Government support, he said.
“It defeats the purpose of what we’ve done very successfully since 2007, which is to build a privately-funded retirement savings pot which is going to reduce the strain on the Government.”
Generally individuals are eligible to withdraw all their KiwiSaver funds when they reach 65 years old.
Individuals who have been in KiwiSaver for at least three years may also be able to withdraw some money to put towards buying a first home, or land to build a first home on.
People can also apply for an early withdrawal if they are suffering significant financial hardship.
As at March, there were 3 million people enrolled in KiwiSaver.
Collins said a lot of KiwiSaver money was sitting in default funds or held in foreign shares.
“National says it may be more valuable to you invested in your own business.
“It’s your choice whether to leave it with the fund managers or invest it yourself.”
National’s scheme, dubbed BusinessStart,
Collins told RNZ that, as someone who had started and sold businesses in the past, she knew how hard it could be to get a one started.
It was particularly difficult to start a business if the owner had nothing to borrow against, she said.
“You can’t go and borrow money if you haven’t anything to borrow against.”
Collins said many people would have $20,000 in their KiwiSaver that could be used as seed capital for a new business, under the new National policy.
“We’re saying if they want to use that we would let them use it.
“It’s an opportunity to give people a second start.”
ACT leader David Seymour said accessing KiwiSaver was tempting, but the real issue facing small and medium businesses was the possibility of higher taxes to pay for an increase in government spending.
“Out-of-control government spending now is going to have to be repaid with higher taxes later, and that will act as a massive drag on small businesses,” Seymour said.
“It’s no good freeing up people’s KiwiSaver accounts when they’re going to have to pay it back in taxes.”