Media Releases

Robbing Peter To Bribe Paul

In an announcement entitled "State sector workers to get retirement savings help" Prime Minister Helen Clark and State Services Minister Trevor Mallard unveiled their new retirement savings scheme for the state sector, funded by the taxpayer. Helen Clark and Trevor Mallard said the announcement meets two important government objectives, the building of a strong public service and promoting retirement savings amongst employees. They noted their scheme models the type of arrangements the government would like other employers to develop. The scheme will be available to state sector employees in government departments, employees in the state school sector (including support staff) and registered teachers employed by free kindergarten associations. Oddly enough, free kindergarten associations are the only group of private employers whose staff are included in the coverage of the new scheme. Here again we have the misguided Minister of Education further deluding himself that he owns the free kindergartens and employs their staff. The retirement savings scheme is said to be one of the fruits of the Partnership for Quality Agreement. The government, the PSA, the Council of Trade Unions, and NZEI have been working together to develop the scheme over the last year. As with their push for pay parity for kindergarten teachers only, the NZEI have again shown their patent disregard for their members in the rest of the early childhood sector. Effectively the excessively high taxes paid by those in the education and care sector are being used to subsidise the retirement savings of their colleagues employed by free kindergarten associations. It is an utter cheek for Mallard to then say that he wants other employers to follow suit and fund retirement funds for their employees in the same way he has for his employees. First he under funds our sector, then he over taxes us so he can fund a retirement scheme for well paid public servants and selected other favourites, and then he wants us to be a good employer like he is and establish subsidised retirement schemes for our employees! Don't we all wish we could afford to do so! Go to "ECC Should Act As A Good Employer" says NZEI for the NZEI response to this release and further comments from the ECC. The ECC is currently considering whether to make an application to the Human Rights Commissioner on behalf of early childhood teachers employed in the education and care sector who are being discriminating against (by the Government) because of who their employer is (specific illegal grounds under Human Rights Act). The following is a list of "Questions and Answers" provided by the government about their state sector retirement savings scheme. When will the scheme be operational? The retirement savings scheme will be operational from July 2004. Who is eligible? The scheme will apply to employees of government departments and entities for which the State Services Commissioner has statutory responsibility for negotiating collective agreements. About 96,000 employees are eligible. These include: · the 35 public service departments; · the six non-public service departments (Defence Force, SIS, Office of the Clerk, Parliamentary Services, Police, Parlimentary Counsel Office); · the state school sector (including support staff); and · registered teachers employed by free kindergarten associations. Those employees who already receive employer contributions greater than the maximum (as stated for this scheme) will not be entitled to additional employer contributions. How will contributions to the scheme work? Employees will be able to choose their desired level of regular contributions, paid directly from their salary. Employers will match these contributions up to a maximum of: · 1.5 per cent of gross salary in year 1, less withholding tax ; and · 3.0 per cent of gross salary in year 2, less withholding tax. The employer contributions will be in addition to total remuneration, and not exchangeable for cash or other benefits. Employer contributions for the existing primary school teachers’ scheme will increase to (the equivalent of ) 3.0 per cent (less withholding tax) in 2004, then pause to align with the new scheme. Who will be the retirement savings scheme providers? Employees will be able to choose from a limited range of investment providers and investment funds that will be authorised to accept employer contributions. It is likely that these providers will be selected via a competitive tendering process to be undertaken in November 2003. What are the other features of the retirement savings scheme? Work is being undertaken on the final features of the scheme but it is likely to include the following: · The scheme will be voluntary for employees. · It is not linked to length of service so new employees will be eligible. · It will be a defined contribution scheme. · It will be portable and transferable. · Administrative costs and fees will generally be paid for out of contributions. However, this will be subject to the terms of any existing arrangements, and any future negotiations within individual agencies. · Employer contributions will vest immediately to the employee’s account. · All contributions (other than employees’ "voluntary" contributions) will be locked-in until retirement (possibly subject to some hardship provisions). · Employer contributions will be back-dated to 1 April 2004, subject to them being matched by employee contributions. How will the employer contributions be funded? Employer contributions will be funded from ‘new money’ held in Vote State Services. This ‘new money’ will cover employer contributions to the stated maximums. If individual agencies negotiate to pay higher contributions or administrative costs, this will be funded directly from agency baselines. The total cost of the scheme will depend largely on the uptake. Based on an uptake of 30 per cent of eligible employee, the costs are anticipated to be: · $19 million in year 1 · $32 million in year 2 The funding mechanism will be reviewed during the project implementation period, particularly for its suitability beyond year 2. Who will manage the establishment of the scheme? The establishment of the scheme will be managed by the State Services Commission and Treasury, in partnership with the PSA and other state sector unions. How did the scheme come about? The scheme has been established in accordance with the Partnership for Quality agreement between government and the PSA, and is the result of work undertaken within the Tripartite Forum, involving the Minister of State Services, the PSA, and public service chief executives. Is this scheme a first? The previous superannuation scheme for government employees (the GSF) closed to new members in 1992. This scheme is therefore the first major initiative across the whole of government in 11 years. However some individual departments have initiated their own schemes and arrangements, some of which will be integrated into this new scheme.

17/11/03 - Sue Thorne