The Revenue Minister is refusing to say whether the government will consider guaranteeing employers' KiwiSaver contributions, after revelations thousands of firms owe nearly $30 million to their staff.

Photo: RNZ / Alexander Robertson

As RNZ reported earlier this week, Inland Revenue (IRD) has been chasing employers for $29.3m in outstanding payments and penalties accumulated since the retirement savings scheme was launched in 2007.

At the end of June 2015, 1663 employers had failed to pass on $15.3m in KiwiSaver payments deducted from their employees' salaries to the IRD.

These deductions were government guaranteed so workers would eventually get the money.

Businesses are also legally required to pay the equivalent of 3 percent of an employee's gross salary towards their KiwiSaver.

Since 2007, 2210 employers had failed to pay $10.6m in those employer contributions to 46,154 employees.

Critics say IRD has been too slow to act in collecting the debt, and Labour finance spokesman Grant Robertson said the party might look at the idea of the government also guaranteeing employers' contributions.

Photo: RNZ / Alexander Robertson

Revenue Minister Michael Woodhouse would not comment on whether that was something the current government would consider.

In a statement, Mr Woodhouse suggested part of the reason for the shortfall was that some companies had gone bust, putting their staff's KiwiSaver payments at risk.

"Insolvency law gives employees priority in the liquidation of the company. We do have a framework in place and, while it is unfortunate when this happens, employees are protected in law where possible," he said.

Financial columnist Mary Holm said there were strong arguments on both sides on whether the government should guarantee employer contributions.

For example, it could create a moral hazard for taxpayers because it might encourage more employers not to pay up, she said.

"On the other hand, we've got employees who are not getting treated fairly and that is certainly distressing.

"I wouldn't be battling too hard against their being bailed out by the government, I have to say."