MPs urged to 'lead by example' and trim superannuation subsidy

The Taxpayers Union says MPs should be "leading by example" and wants politicians' gold-plated superannuation scheme "trimmed".

It comes as the government halves its KiwiSaver contribution to New Zealanders, and means tests access to it, saving two and a half billion dollars over four years.

All MPs are entitled to a superannuation subsidy allowing them to receive 2.5 times the percent they contribute from their salary, up to a maximum payment of 20 percent.

Parliamentary Service explained the maximum subsidy could be accessed if an MP contributed 8 percent of their salary to a registered scheme. If an MP contributed at a rate lower than 8 percent of their salary, the subsidy payable is reduced proportionately.

A law passed in 1977 required the Remuneration Authority to provide superannuation for MPs, which has been done consistently since at least the 1990s.

That legislation specified the maximum 20 percent payment of the "gross salary payable to a backbencher".

The prime minister is allocated the same amount of superannuation contributions as a backbencher, for example.

Currently a backbencher is paid about $170,000, 20 percent of that would be about $34,000. If all 123 MPs got the maximum entitlement the scheme would cost more than $4 million a year.

The subsidy is paid out of public money under "permanent legislative authority" without the need for annual appropriation, said Parliamentary Service.

MPs can choose whether to apply the subsidy to their KiwiSaver, or another separate superannuation scheme of their choice. An MP can choose not to be in a superannuation scheme, but if they are, they must get the rate according to the law.

According to the latest Register of Pecuniary Interests as at 31 January 2025, all members are enrolled in a superannuation scheme of some sort, with the exception of NZ First MPs Winston Peters and Casey Costello, and Te Pāti Māori MP Mariameno Kapa-Kingi.

An explanatory note in the superannuation legislation said parliamentarians do not have "security of tenure" and there is a high turnover of members, so the scheme recognised the need for parliamentarians to provide for their future.

The last time the subsidy was reviewed was in 2003.

Chairperson of the Remuneration Authority Geoff Summers acknowledged that was a "long time ago" and that determination had "carried on and not changed through that time".

He said he doubted the authority would consider changing it, because of a provision in the Remuneration Authority Act that stated its not allowed to reduce the pay of any of their client groups - including MPs.

"If we reduce their superannuation, we'd have to increase their salary accordingly, so that wouldn't make much sense."

Summers said the determination could be reviewed, but it couldn't be changed because of what the law stated.

"So while the law says what it does, our hands are tied, pretty much."

He acknowledged any government is able to change the law, "absolutely, if they chose to, that's the right of any Parliament to do that," if a government wanted to reduce the subsidy amount.

"It's a political decision."

Because Summers was a Crown appointed statutory officer, he couldn't comment on political decisions.

"I won't comment on whether or not Parliament should do something - that's up to Parliament.

"I will comply with the law, and if they change the law, I will comply with the new law. That's how the system works for me."

Head of communications for the Taxpayer Union, Tory Relf, said at the moment MPs are contributing 8 percent of their salary and getting 20 percent back when most people are "fortunate to get 1:1 matching".

She said a 1:1 ratio would be a "fair deal".

"Kiwis are having to tighten their belts. And MPs should be leading by example."

Relf said the scheme as it works currently shouldn't exist "in this environment".

"We are borrowing money to pay for the scheme, which isn't just wasteful, it's unfair to the next generation of taxpayer."

Relf wanted the government to take a second look at the scheme, saying "it would be about symbolic leadership and restoring trust between taxpayers and the MPs."

RNZ approached all political parties for their position on the scheme.

National said the Remuneration Authority is responsible for MPs' superannuation, but didn't provide a response to questions about whether the scheme was appropriate in light of the changes to the government's KiwiSaver contribution or whether changes should be made to it.

"Superannuation is part of MPs' total remuneration package and is set independently by the Remuneration Authority. All retirement schemes are declared in the Register of Pecuniary Interests."

While the government has halved its KiwiSaver contribution to Kiwis, it changed the default rate which could increase employer contributions for members.

Savings for 80 percent of New Zealanders will increase because of the new default rate, but self-employed or unemployed people - who don't receive an employer contribution - would see a decrease in their savings because of the decreased government top up.

Currently the government will contribute 50 cents per dollar of contribution by an employee, up to a maximum of $521.43 a year. From 1 July 2025 that will be halved to 25 cents per dollar, up to a new maximum of $260.72.

Officials said in the Regulatory Impact Statement, the change would "reduce the incentive" for people to make their own contributions.

The finance minister was also approached for comment but declined to respond.

Labour said it opposed the government's cuts to KiwiSaver, but supported MP pay (and superannuation) being set by the Remuneration Authority.

The Greens also pointed out the overall salary and allowances package, including superannuation, for MPs was set independently by the Remuneration Authority. The party said it supported this system remaining independent.

The Greens also slammed the changes to KiwiSaver saying they weren't "fair", in particular the halving of the government contribution, but pointed out changing the MP super scheme won't benefit those missing out on KiwiSaver funds as a result of the contribution rate changes.

ACT leader David Seymour said every worker's total remuneration included their base rate and any other costs like super, ACC, and holiday pay.

"Whether you believe MPs' total remuneration is too much or too little, the balance of base rate versus super contributions doesn't change the total amount."

NZ First's leader Winston Peters was out of the country and the party said it had no comment while he was away.

Te Pāti Māori said the government shouldn't be cutting everyone else's retirement funds while leaving their own untouched.

"We don't believe MPs deserve special treatment when over two million people in Aotearoa earn less than $30,000 per year."

MPs are due a payrise at the beginning of July this year, with a backbench salary rising to around $177,000.

The Taxpayer's Union said this was an opportunity for a pay freeze.

"It's been done before, and we are borrowing money to pay for those increases. So while we're still in a deficit, I think it's important that they do lead by example," Relf said.

Prime Minister Christopher Luxon said earlier this month he would follow the advice of the Remuneration Authority and "leave it at that".