KiwiSaver sign-ups shrink after kick-start removal

The number of children signed up to KiwiSaver has fallen. Photo / Thinkstock

The number of children signed up to KiwiSaver has shrunk for the first time ever in the wake of the Government's decision to ditch the $1000 kick-start incentive.

Figures released today by the Inland Revenue show 368,079 under 18s year old were in KiwiSaver as of the end of June - 551 fewer children than as of the end of May.

The Government announced on May 21 - Budget day - that it would drop the kick-start effective immediately.

The kick-start was the only incentive available to children as they are not eligible for the annual member tax credit of up to $521.

The member tax credit is paid into the accounts of those 18 and over who contribute to their savings at a rate of 50c per $1 saved by the member up to $1042.

The figures also show the overall number of people signing up to KiwiSaver in June was lower than it has been in the last three months.

Just 11,656 people joined the retirement savings scheme in June pushing the total number of members to 2,530,919.

That compares to 17,016 in May, 15,081 in April and 16,047 in March.

Finance minister Bill English said the figures released were consistent with its assessment that removing the kick-start would not change the number of working age people signing up to the scheme.

"Removing the taxpayer-funded kick-start incentive in Budget 2015 was not expected to affect the number of working-age people joining a KiwiSaver scheme," he said.

"The figures released today are consistent with that assessment, although it is only one month's data and we will have to see how this plays out over coming months."

While the additional over 18 year old sign-ups were down slightly on May English said the monthly figures had ranged from 11,021 to 18,218 over the last year.

Revenue minister Todd McClay said part of the blame for lower sign-ups in June was because providers pushed through applications made in May to ensure they received the kick-start.

"Inland Revenue received more than 2,800 enrolments effective May 21, compared with a typical daily amount of around 400.

"Clearing that backlog meant there were fewer applications to be processed in June."

McClay said the life-time value of employer contributions, together with the annual government subsidy of up to $521 available for employees and the self-employed meant there continued to be a strong incentive for over 18 year olds to participate in KiwiSaver.