The government is proposing further changes to super schemes in line with its aim of encouraging greater savings.
Wednesday, August 15th 2007, 6:42AM
The proposed amendments are said to give people in super schemes that comply with KiwiSaver rules more protection and allow savers better access to their funds in retirement.
"It is important that existing schemes which wish to become KiwiSaver-complying face the same rules as KiwiSaver schemes," government ministers say in an announcement.
The changes have been described as "small but significant fine-tuning of proposed KiwiSaver legislation."
The changes include:
Requiring complying funds as well as KiwiSaver funds to lodge employer participation agreements with the Government Actuary. Employer participation agreements set out conditions under which employees are scheme members. This measure will give greater protection to employees, by ensuring there is government oversight of employers' involvement in these funds.
Allowing benefits in complying superannuation funds to be withdrawn as a lump sum. This will give members of complying schemes the choice of taking a lump sum or buying an annuity when they are eligible to access their savings, a provision which already applies to KiwiSaver schemes. As legislation stands, members of complying superannuation funds may be forced to buy annuities at extra cost.
Avoiding "double-dipping". Members of some existing superannuation schemes in the State sector already receive a contribution from the Crown as their employer. This will continue unchanged. However the legislation will be amended to provide extra assurance that if these people also join KiwiSaver they will not be able to receive additional employer contributions.
As well, as previously announced, the legislation will be amended to make sure that people receive the member tax credit of up to $20 a week from the time they join KiwiSaver. As the legislation is currently worded, some KiwiSaver members would not become eligible for the tax credit until several weeks after they began making contributions.
Under the proposed law change, the member tax credit will apply from the first of the month in which the contribution is made, so that, for example, all contributions that begin in July will be matched by a tax credit from 1 July.
"We are confident these changes will further strengthen KiwiSaver, and make it a more attractive proposition for New Zealanders wishing to secure a more comfortable retirement," said the Ministers.
The changes will be added to the Taxation (Annual Rates, Business Taxation, KiwiSaver and Remedial Matters) Bill, which is currently before Parliament.
