Hospitality Magazine column

More compliance costs with KiwiSaver

We should all applaud the motivation behind KiwiSaver in encouraging New Zealanders to adopt good saving habits. It would be great if KiwiSaver did that in a simple, clean and straightforward manner. KiwiSaver is however far from simple and adds another level of complexity for employers already challenged by a raft of bureaucratic compliance costs, particularly those in the hospitality sector who have the added burden of compliance costs associated with the service of alcohol.

The Hospitality Association has been heavily involved in preparing its members hospitality business operators for the commencement of KiwiSaver on the 1st of July. It has been very clear from much of the media comment that there continues to be a significant level of confusion amongst employers about KiwiSaver. To ensure Hospitality Association members have the best shot at getting this right has required the development of a seven page resource outlining all the employer’s responsibilities, detailing what they may do and what they must do. In addition, the Hospitality Association has also undertaken a rigorous tender process involving an external financial consultant to appoint a preferred KiwiSaver provider for HANZ members to consider. This involved calling for proposals from providers and having them professionally analysed. The response to that process was excellent with the appointment of a preferred provider with an outstanding investment record also offering reduced fees for HANZ members’ employees.

It will be very interesting to see just how many employees in the hospitality industry decide to stay in KiwiSaver as they take up new employment, or indeed how many existing employees decide to opt in.

There is also the potential for a hidden cost to the hospitality industry overall if there is a high uptake of KiwiSaver. Reducing New Zealanders’ incomes by 4% is effectively reducing the level of discretionary expenditure, expenditure which as an industry we would have hoped might have been spent in hospitality businesses on food and beverage, or indeed on a domestic holiday.

The long term objectives of KiwiSaver are laudable but in the short term it is unlikely to bring any comfort to hospitality employers and their businesses.