KiwiSaver auto-enrol may net a million

By Vernon Small Last updated 05:00 03/08/2011

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.

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