Budget 2012: KiwiSaver auto-enrolment plan deferred

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Finance Minister Bill English shored up his chances of achieving a surplus in 2014/15 by deferring last Budget's costly KiwiSaver auto-enrolment plan, saving hundreds of millions of dollars.

The move is part of series of tweaks to the savings scheme which include new disclosure rules to make KiwiSaver fund performance more transparent.

In his Budget speech Mr English said auto-enrolment "is now not possible without putting the updated forecast surplus at risk".

"Therefore public consultation on auto-enrolment has been deferred until after 2012 and the policy won't be implemented until after 2014/2015."

Mr English said his Government made it clear when the plan was announced last year that it would not go ahead unless there were sufficient surpluses to pay for it".

Under the plan, announced before last year's Budget, everyone in the workforce over 18 who was not already in the savings scheme would have been enrolled but would have had the ability to opt out.

The plan was scheduled to begin when the Government's finances returned to surplus.

The plan was expensive not only because of the member tax credits, the 50c the Government contributed for every dollar from the saver, but also because of the $1000 kick start for each saver who joined.

Auto-enrolment was expected to cost $514 million over four years but most of that would fall in the first year.

Today's Budget also creates new disclosure rules for KiwiSaver.

KiwiSaver providers will now have to produce four quarterly reports and a larger annual report for each fund they run using a standard template.

The reports will contain information on returns, fees and charges, asset holdings, who manages the fund and any conflicts of interest.

The reports will be posted in a standardised format on providers' websites.

Mr English said the disclosure rules were intended to ensure "investors can have better information to compare fund performance, so they can make informed choices about where to invest".