“KiwiSaver has been successful in attracting members, with 2.5 million New Zealanders having a KiwiSaver account and together receiving $2.5 billion in kick-start payments since the scheme started in 2007,” English says.
“However, it also has considerable costs for taxpayers. The Government will spend more than $850 million this year on two subsidies – the ongoing government subsidy of up to $521 a year per member and the $1,000 kick-start.
“Because of these costs, the Government has decided to remove the $1,000 kick-start payment from today.”
Contributing KiwiSaver members aged 18 or over or under 65 will continue to receive an annual Member Tax Credit from the Government of up to $521.
Employers in general are still required to contribute at least 3% of an employee’s gross wage or salary and employees will continue to make their own contributions.
“Removing the kick-start payment for future enrolments will save over $500 million over the next four years,” English says. “This money is being reinvested in this Budget into priority public services.”
In 2015/16, the Government is forecast to spend $705 million on the KiwiSaver Member Tax Credit plus $12.3 billion on New Zealand Superannuation.
“Auto-enrolment when starting a new job, the 3 per cent employer contribution and the member tax credit of up to $521 each year means people still have an incentive to sign-up to KiwiSaver and to keep saving for their retirement.
The change does not affect existing KiwiSaver members.
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