Have your say: National gives Kiwisaver a haircut
10th Dec 08, 11:56am
National has announced changes to Kiwisaver claiming they "will make the scheme more affordable for members, employers and taxpayers, especially in the current economic climate." The changes follow from one of National's pre-election promises. Finance Minister Bill English said the changes include:
- The minimum member contribution rate will reduce from 4% to 2%, and 2% will be the default contribution rate for new employee members from 1 April 2009.
- The member fee subsidy (NZ$40 a year) will be discontinued from 1 April 2009.
- Compulsory employer contributions will be capped at 2% from 1 April 2009.
- The employer tax credit will be discontinued from 1 April 2009.
- The employer superannuation contribution tax exemption will be capped at the compulsory employer contribution of 2% from 1 April 2009. (That is equivalent to 2% of the employee's gross salary or wages.)
- The KiwiSaver Act will be amended to make it clear that upon joining KiwiSaver, no employee can have their gross pay reduced as a result of employer contributions. This will ensure that when employees join KiwiSaver, the compulsory contributions from their employer are a genuine addition to their existing pay. The changes will also provide employers and employees with the ability to negotiate their own arrangements in good faith. The Employer Relations Act amendment relating to KiwiSaver will then be obsolete, and will be repealed from the date of assent of the Employment Relations Amendment Bill.
- The KiwiSaver Act will also be amended to provide a limited exemption from compliance with securities and other related legislation for a limited period so that providers have time to update prospectuses and investment statements, for example.