Kiwisaver kick start will remain

Savers will be expected to contribute more and employers will also be expected to pay more in compulsory KiwiSaver contributions. File photo / NZ Herald

More details of changes to KiwiSaver will be announced in next week's budget.

Prime Minister John Key outlined to a business audience in Wellington this afternoon what changes will happen to the scheme.

He said there will be less money coming from tax credits and savers will earn less in tax credits from the Government for KiwiSaver accounts.

Savers will be expected to contribute more and employers will also be expected to pay more in compulsory KiwiSaver contributions. The lowest contribution rate for workers is currently 2 per cent.

The $1000 kick start for new KiwiSaver accounts will remain.

Mr Key said the detail of the changes will be in next week's Budget, but he says that people will be given time to adjust and the changes won't come in this side of the election.

"Increased contributions from business and people will happen at a time when the economy will have well and truly recovered and both wages and employment will be increasing."

Treasury was predicting KiwiSaver would have about 700,000 members in it by now but there are already 1.7 million members, meaning each of those members would get the $1,000 kick-start, costing the Government $1.7 billion.

Phil Goff says National cut the worker's contribution from four to two per cent of their wages and now they want to raise it. He says it's typical of National.

"Why don't they start with the people that are the big income earners that got those fabulous tax cuts, thousands of dollars a week, and not with the lower and middle income people who will be paying more because of the cuts in these tax credits."

Business New Zealand's Phil O'Reilly says it could affect wage increases.

"Definitely it will be a factor in employers' minds just as current KiwiSaver contributions are a factor in employers' minds."

- Newstalk ZB