National likely to dump savings sweetener

National will probably shelve Government plans to invest $1000 into new personalised KiwiSaver accounts, if it wins the election.

National leader Don Brash yesterday criticised the plan, saying while he wanted to see New Zealanders saving more, he doubted that the scheme would have "any material impact on saving behaviour".

The Government-paid cash deposit, announced in the Budget, would result in many people opening work-based savings accounts to get the money, but most would probably then lie dormant as there was no real incentive to make further personal contributions, said Dr Brash.

He refused to say whether National would keep the voluntary scheme, which employees can take with them when they change jobs.

"We are going to look very carefully at that before making a final decision. We're not convinced that it's well-designed."

National finance spokesman John Key said he could not rule out dumping the scheme, although the party was investigating if it could be redesigned.

Even if some aspects were retained, National was "certainly unlikely to support the $1000 going into that account".

Any scheme would be for low- to middle-income earners only.

National could, for example, offer a dollar-for-dollar Government contribution, worth a total value of $1000 for those groups, Mr Key said.

The party was not opposed to Government plans to help fund account management fees and would retain that if it kept the scheme.

Dr Brash, meanwhile, was yesterday "only reasonably confident" that any Government he was a part of would not raise the age of eligibility for superannuation.

Asked in Napier if National would raise the current 65-year-old threshold, he reiterated that National was "committed to continuing to pay into the New Zealand Super Fund".

The public were "sick and tired" of the issue being a political football. National had originally wanted to use fiscal surpluses to retire debt at a faster rate, said Dr Brash.

"But clearly New Zealanders don't yet see reduced debt as being as tangible as a jam-jar with coins in it, even if those coins are invested in the New York sharemarket."

National had said the age of eligibility might increase gradually, "but it's a long way away and it's not likely to affect anybody at all who is currently over the age of 50".

"It won't be done by any Government of which I'm involved, I can be reasonably confident of that."

Dr Brash ignited controversy last year when he said the 65-year start might not be sustainable after 2020.

Savings scheme

A work-based savings scheme open to 2 million New Zealanders will be kick-started by the Government paying $1000 into each new retirement account.

Budget figures estimate the KiwiSaver plan may attract 415,000 workers in its first three years.The plan is due to begin in 2007.

Savings are meant to be locked in until a person retires.

Low-to middle-income earners may be able to access their money to buy their first house and could get another subsidy of up to $5000 each for that.