1/1 Auckland, New Zealand • 17 May 2007

Budget increases attractiveness of savings

ING applauds the Budget initiatives which provide a significant boost for both KiwiSaver and saving in general.

Today’s budget announced tax credits of up to $20 per week from the beginning of 01 July coupled with a $40 per annum subsidy of fees. Also announced were compulsory employer contributions to be phased in from July 2008 with a tax credit to reimburse employers for the cost of matching employee contributions.

Marc Lieberman, Chief Executive, ING (NZ) Limited said “These tax credits and fee subsidies coupled with the earlier announced $1,000 kick-start and employer contribution tax exemptions combine to make KiwiSaver a very attractive proposition for savers.”

“If the Government’s objective is to encourage employees to save through KiwiSaver, and for employers to actively support the scheme, they have succeeded. We would expect to see more New Zealanders taking up KiwiSaver as a direct result of the changes announced in this Budget.”

“The overseas experience has shown that, short of compulsion, incentives are the best way to drive widespread changes in savings behaviour. The Government have clearly learnt lessons from these overseas experiences and have also listened to feedback from the industry.”

The Budget also announced a welcome reduction to the corporate tax rate, from 33 to 30%. The reduced rate will also apply to Portfolio Investment Entities (PIEs), further enhancing the attractiveness of investment vehicles such a KiwiSaver, other managed funds and listed property vehicles for 33% and 39% taxpayers.

“Without doubt, the Budget has significantly increased the attractiveness of saving for all New Zealanders.” added Lieberman.

ENDS

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