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Kiwisaver mortgage diversion begins 1 July

Gordon Copeland Press Release

Monday, 30th June 2008

Kiwisaver mortgage diversion begins 1 July

Independent MP and Kiwi Party member Gordon Copeland is delighted that tomorrow, 1 July, marks the date on which the mortgage diversion element of Kiwisaver is due to begin.

"It was on my recommendation that the Government decided to include mortgage diversion in the Kiwisaver scheme," said Mr Copeland.

"When Kiwisaver was first introduced, John Key, among others, opposed it on the basis that the best thing people with mortgages can do to save for their retirement, is pay off their mortgage. That argument has some merit but fortunately, as from 1 July, mortgage diversion will allow the more than 674,000 kiwis who have signed up to Kiwisaver both to pay off their mortgage and save for retirement at one and the same time!."

"Given today's high interest rates, I have no doubt at all that this will prove to be an immensely popular feature of the Kiwisaver scheme because the reality is that without it, trying to save and pay off a mortgage at the same time, would have been impossible for many families."

"Indeed, for that reason, submitters to the Select Committee on the introduction of the scheme stated that most kiwis would join, collect their $1,000 bonus from the Government, and then go on a contributions holiday until they had repaid their mortgage in 20 or 30 years time! Mortgage diversion was my answer to that and will, I believe, ensure that the great majority of Kiwisavers will continue to contribute year in and year out from now until retirement."

Mr Copeland explained that mortgage diversion would allow Kiwisavers to divert up to half of their own contributions towards mortgage payments on their own, main home.

"With this enhancement, Kiwisaver is a great retirement savings plan and an essential pathway towards financial security in retirement."

He noted however that mortgage diversion may be delayed until August for some Kiwisavers, because of a technical hitch raised by the banks, made public last week.

"It reflects poorly on the banks that they raise this issue on the eve of the mortgage diversion start date. They have had plenty of time to set up their systems and frankly their customers deserve better."

ENDS


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