Signing up children as KiwiSavers is about to get harder.

Family members will no longer be able to sign children up to KiwiSaver after refinements are made to the KiwiSaver scheme in the forthcoming tax bill.

Currently anyone can sign-up a child under 18 to the retirement savings scheme, and once the child is working and earning an income, he or she has to contribute unless choosing to take a contribution holiday.

However the tax bill to be presented to parliament before Christmas will introduce a new set of rules which will restrict sign-ups for those under 16 to legal guardians and 16 – 17 year olds will have to sign jointly with a legal guardian to give permission for the KiwiSaver membership to go ahead.

Those without a legal guardian will have to sign forms giving their permission.

Revenue Minister Peter Dunne says the changes are being proposed to stop family members from locking youths into KiwiSaver which they may not want to contribute to later in life.

The main incentive which has encouraged family members to sign their children up to KiwiSaver is the $1000 kick-start payment received by all those who sign up, which many perceive as free money.

Inland Revenue says most members under 18 years are not contributing to their accounts.

For the 2008/09 year, 6% of the more than 180,000 members who are children contributed through Inland Revenue to their accounts at a total value of $2 million.

 Inland Revenue says this means there are likely large numbers of accounts being managed by providers containing nothing more than the $1,000 kick-start payment which means money is whittled away by fees before a contribution is even made.

Of the contributing children, almost all are contributing through salary or wage deductions.

The changes to KiwiSaver are expected in July next year.