After years of repeated tinkering in successive Budgets, KiwiSaver looks set to finally be left alone this year.
Prime Minister John Key has announced in a pre-Budget speech that there will be no changes to KiwiSaver tax credits.
Last year’s budget saw the government halve the maximum yearly tax credit from $1040 to $520, a change that kicked in earlier this year.
It also flagged an increase in the minimum employee contribution from 2% to 3%, which is due to come into effect next year.
Not-for-profit group Workplace Savings NZ, a membership organisation representing the superannuation industry, has welcomed Key’s comments.
Workplace Savings NZ chairman David Ireland said the certainty that message provides would come as a welcome relief to all those involved in workplace savings.
“Since it was first established, KiwiSaver has been subject to ‘design tinkering’ in just about every Budget, so this will be a refreshing change.
“It means the only change KiwiSavers are likely to see on the horizon, at a practical level, is the proposed increase in contribution rates from 1 April next year.
“There are currently over 1.9 million New Zealanders using KiwiSaver for their savings, and they should be reassured by the Government’s announcement.”
KiwiSaver is about to enter a new stage in its life cycle, with those aged 65 or over who joined on day one becoming eligible to withdraw their savings on 1 July.
“The stability signalled in KiwiSaver incentives and design is great news. It will help free up providers’ capacity to develop options for helping those KiwiSavers maximize the long term benefit of those savings,” said Mr Ireland.
While KiwiSaver has been spared in this year’s Budget, future changes are inevitable: National plans to introduce auto-enrolment at some point, while Labour has said it will make the scheme compulsory.