2008 pledge by National: Retain kick-start, member tax credits, tax exemption on employers contributions and first time home subsidy. Will you stay invested if they go?

2008 pledge by National: Retain kick-start, member tax credits, tax exemption on employers contributions and first time home subsidy. Will you stay invested if they go?

Will political Jiminy keep Key's conscience clear on KiwiSaver?

By Amanda Morrall

The public record is a blessing and a curse for politicians.

Whether it will prove the former or latter for National will be revealed tomorrow when Prime Minister John Key clarifies Government's plan for KiwiSaver, originally heralded as a solution to the country's alleged national savings crisis.

Key has already indicated that KiwiSaver changes are a fait accompli. It's not a matter of if but when and what?

KiwiSavers, of which there are now more than 1.6 million, will undoubtedly be on the edge of their seats as will the dozens of providers managing the ever fattening funds under management which are now worth more than NZ$8 billion.

In advance of the news, membership surged last month with the uninitiated clamouring to capitalise on the NZ$1,000 kick-start lest it gets the axe. (See article by Amanda Morrall here on membership rally).

KiwiSaver has been a success beyond National's own expectations. Treasury originally projected a membership roll of 680,000 --- two years from now in June 2014.

Asked on Monday by interest.co.nz reporter Alex Tarrant whether changes to KiwiSaver would be in place before the November 26 election and therefore break an election promise, Key said: “You’ll have to wait and see when we discuss that on Wednesday, we’ll be making small comments there. But no, I don’t believe that they will be a broken promise.”

Key also suggested the KiwiSaver industry was well placed to handle any changes. (See Alex Tarrant's full article here.)

Given National's 2008 pledge to retain kick-starts, tax member credit, first time home subsidies, and tax exemption on employer contributions, it will be interesting to see where KiwiSaver cuts are made.

Don't take our word for it, you can revisit National's policy on KiwiSaver below, or by clicking here to read their policy paper in full.

 

1. KiwiSaver

National is committed to keeping the KiwiSaver scheme and making it an enduring and affordable scheme for members, employers, and taxpayers.
People have come to rely on KiwiSaver as their principal retirement savings vehicle. Currently, around 780,000 people have an active KiwiSaver account.
National will ensure that KiwiSaver remains simple to join, simple to contribute to, portable, and voluntary.
National will also ensure that KiwiSaver is accessible and contains incentives to enroll and retain as many New Zealanders as possible.
The bulk of the KiwiSaver scheme will, therefore, remain unchanged.
In particular, National will retain:
• Automatic enrollment of new employees, with the right to opt out.
• Automatic deductions from a member’s wages or salary.
• The $1,000 ‘kick-start’ payment when people first join KiwiSaver.
• The member tax credit, paid by the government into KiwiSaver accounts, which matches members’ contributions up to a maximum of $1,040.
• Compulsory matching employer contributions.
• Employer contributions exempted from employer superannuation contribution tax (ESCT).
• The annual fee subsidy and the first home deposit subsidy. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

14 Comments

If they remove the tax credit, then anyone who is self employed will probably not bother making further contributions into it. Then the amount remaining in the account will be whittled down over the years in fees.

It think if they make those changes, they should only apply to new people signing up, as otherwise they are changing the contract terms midway through the contract. 

Please repeat this promise list compared with the actual changes announced in the budget on the 19th.

Thanks

Will do.

"Kiwisaver: What a Great Idea!"

If they remove the tax credit then no. There would be no benefit over other places I can and will put it instead.

It still amazes me that anyone didn't understand from the beginning that Kiwisaver would be raped and pillaged by suceeding governments. (Especially those of the National Party variety.)

The scheme was always well-intentioned enough, but it could never really work, because there was no protection from the depredations of thieving politician scum.

So the very people it was supposed to assist - the weakest and most naive - inevitably lose the most, as always.

Meanwhile, the wealthiest and most powerful get tax cuts and shed any obligation to the people who made them wealthy and powerful, and who keep them wealthy and powerful.

What exactly do you understand to be "thieved" when a Government decides it's going to reduce the amount it is borrowing - effectively from future taxpayers - to put into your account for your future benefit?  What has been "thieved" and from whom?

Wow, it's becoming REALLY difficult to apologise for this government now, isn't it?

You must be exhausted.

No, I'm fine, thank you for your concern.  I don't find it at all difficult to understand why the Government might think that increasing public debt to finance private benefit is a poor way of managing public finances. 

I do, however, still find it difficult to understand why you think that something has been stolen from you by this policy change.

 

Is the Government borrowing to pay for Kiwisaver etc or is it borrowing to pay for tax cuts? 

Cutbacks to kiwisaver will be another good reason for many kiwis to move to Australia.

yeah right, and move over there to be faced with Aussies various cuts.

Or get a mortgage there where the house prices ARE falling and interest rates ARE rising.

Why don't you move to the Cook Islands?

The best way to get ahead is to be a bludger.

You know, buy into a collapsing finance company ponzi scheme because the govt whose members have vested finacial interests in said ponzi scheme will bail it out with taxpayer money.

Worthless P-addicted alcohol-dependent bene losers prosper, while decent hard-working taxpayers support them.

Scum like that should emigrate immediately and do NZ a huge favour. (It'd be the first time they've ever done anything good for anyone else.)

Right, We Are Stuffed?

Pull your head out of the sand son and look at the migration figures.