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KiwiSaver employer debt on the rise

NZ Newswire logoNZ Newswire 3/08/2016

There's been a dramatic increase in the number of employers who aren't paying their KiwiSaver contributions and Labour says it could undermine confidence in the retirement scheme.

Figures obtained by RNZ show that at the end of June, Inland Revenue was chasing 12,182 employers for $28 million in unpaid contributions and penalties.

That's a six-fold jump on a year ago, when around 2000 employers were being pursued for unpaid payments.

Labour's finance spokesman, Grant Robertson, says they must be chased harder.

"That is $28 million of hard-earned entitlements that workers are missing out on, they have put their own wages into the scheme expecting their employers to do the same," he said.

"Employers not paying their fair share threatens to further undermine confidence in the retirement scheme after National has spent years hacking away at it."

Mr Robertson says since National came to power it has taxed employer contributions, scrapped the $1000 kick-start payment and halved the tax credit rate on savings.

RNZ's figures show the debt includes $12.32m in employee contributions taken from workers' salaries but not passed on to Inland Revenue, which administers the scheme.

Employee contributions are government-guaranteed, but the $9.34m in outstanding employer contributions isn't.

Only half of the employers with outstanding payments have been repaying Inland Revenue.

IRD says KiwiSaver debt accounts for less than 0.5 per cent of total tax debt.

Employers who continue to avoid payment could face liquidation or prosecution.

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