Hon Dr Michael Cullen
Minister of Finance
Hon Peter Dunne
Minister of Revenue
MEDIA STATEMENT
KiwiSaver fee subsidy, mortgage diversion rules enacted
Preparations for the 1 July introduction of KiwiSaver advanced today with the signing of an Order in Council that bring into effect both the annual fee subsidy to be paid to members and the rules governing the use of KiwiSaver to help repay the mortgage on the family home.
"We welcome these legislative changes, the last that are required for KiwiSaver, the landmark workplace saving scheme, to go live in July," Finance Minister Michael Cullen and Revenue Minister Peter Dunne said today.
"Under the new regulations, the government will pay $40 a year into members' accounts to subsidise the fees charged by scheme providers.
"The mortgage diversion facility will allow members to divert up to half their contributions to repaying the mortgage on their home, so long as the mortgagee and the scheme provider agree.
"The fee subsidy and the mortgage diversion facility are two of the many incentives designed to make it easier, more attractive and more rewarding for people to save through KiwiSaver. The scheme will help people save more quickly for their first home and enjoy a higher standard of living in retirement.
"The major enhancements to KiwiSaver announced in Budget 2007 – tax credits for contributions and the compulsory employer contribution – will encourage more people to join the scheme and continue to make regular contributions.
"People can be confident KiwiSaver will make a real difference to their long term financial security. KiwiSaver will build the wealth of New Zealanders and provide more kiwi capital to help grow kiwi businesses. It will be good for families and our future prosperity," said Ministers.
Note: The legislation giving effect to the member tax credit became law on 21 May, while that relating to the compulsory employer contribution and associated tax credit is before Parliament and is expected to become law later this year.
Further information is available at:
http://www.kiwisaver.govt.nz
The Retirement Commission's "Sorted" website helps people make decisions about KiwiSaver by calculating how much they are likely to receive at age 65:
http://www.sorted.org.nz/calculators/kiwisaver-quick-calc/page1.php
Contacts:
Mike Jaspers (Dr Cullen), 04 471 9412 or 021 270 9013
Ted Sheehan (Mr Dunne), 04 470 6985 or 021 638920