A work-based superannuation scheme could be in place in New Zealand by April 2007 to help tackle the nation’s poor savings record.

Under the new scheme, the tax office, Inland Revenue, would take $NZ10 a week directly from workers’ wages and place it with an approved superannuation fund.

All new employees in medium and large workplaces would be automatically enrolled in the scheme – but with the right to opt out.

Existing employees would have the option of joining up, but employees from organisations with fewer than five workers would be exempt. This would mean compulsory access for 1,179,830 employees while 347,370 employees working in 253,665 small businesses would be exempt.

A central register would be kept of all contributors and their providers to allow portability.

Money would not be locked in until retirement, and workers could stop payments temporarily if finances became stretched.

Many details are still to be finalised but the scheme has the Government’s acceptance in principle after Finance Minister Michael Cullen said decisions would be made before next year’s budget or as part of it.

The proposal comes from a working group headed by former economic adviser Peter Harris.

Dr Harris told the New Zealand Herald the scheme is a mixture of almost zero compliance costs for employers and very low administrative costs for contributors.

He attributed low savings to confusion and lack of confidence in financial management matters.

According to Statistics New Zealand, only 13% of people aged 15 and over have a superannuation plan.