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KiwiSaver to kill off state savings schemes

Both the State Sector Retirement Savings Scheme (SSRSS) and the Teachers' Retirement Savings Scheme (TRSS) will close to new members from April 1 this year as the government intensifies its KiwiSaver push.

Thursday, January 10th 2008, 7:23AM

by David Chaplin

While the decision to close the government-subsidised State Sector and Teachers' schemes has not yet been made official an announcement is expected shortly.

In a letter addressed to relevant state chief executives dated December 19 last year, Finance Minister, Michael Cullen, and State Services Minister, David Parker, confirmed the closure of the SSRSS and TRSS to new members was imminent.

"The SSRSS and the TRSS will continue in their current form, but the current offer is likely to close to new members from 1 April 2008," the letter said. "Central funding of employer contributions will continue, but this funding will be 'tagged' for these schemes - it may not be used for employer or employee contributions to KiwiSaver."

Once the SSRSS and TRSS close the automatic enrolment of employees in those schemes will be revoked, the letter said, will all new employees then to be auto-enrolled into KiwiSaver.

"This is a significant change, and all agencies that currently offer SSRSS are encouraged to ensure they are ready for it," the letter said.

According to Helen Moody, SSRSS manager, the State Services Commissioner would make the final decision to close the scheme to new members soon.

However, Moody said there were "a number of reasons why this wasn't a rubber stamp exercise". In particular, she said there were several technical hurdles to consider before shutting the door on new SSRSS members.

Moody also said the department was investigating the possibility for existing SSRSS members to transfer current savings into a KiwiSaver scheme - although this would require amendment of the trust deed.

She said while the SSRSS would continue to operate for existing members the government's focus was now clearly on KiwiSaver.

"As was indicated in the 07 Budget, KiwiSaver will be the government's core savings scheme," she said.

According to the latest SSRSS statistics, just over 38,000 members have signed up to a scheme with total assets reaching $336.3 million as at September 30, 2007. The SSRSS funds are split across schemes managed by ASB, AXA and AMP. While the TRSS operates with a separate trust deed under the responsibility of the Minister of Education a similar shutdown process is likely.

The TRSS, which has accumulated about $140 million and over 12,000 members since its launch in 2002, is currently managed by Mercer.

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