Hon Dr Michael Cullen
Minister of Finance
Hon Peter Dunne
Minister of Revenue

27 March 2008 Media Statement

Major step forward on KiwiSaver from 1 April

With 500,000 New Zealanders on board, KiwiSaver takes a major step forward next week with the introduction of employer contributions and tax credits, Finance Minister Michael Cullen and Revenue Minister Peter Dunne said today.

Employers with staff enrolled in KiwiSaver will be required to contribute one per cent of their employees’ salary to their KiwiSaver accounts from 1 April. This will rise by an additional one per cent until 2011 when four per cent contributions will be required.

These contributions will be supported by a government tax credit for employers of up to $20 per week from 1 April.

“Employer contributions will be a vital part of KiwiSaver’s success,” Dr Cullen said. “As thousands of employers already know, contributing to the retirement savings of staff helps strengthen the employee/employer relationship.

“The tax credits to support these contributions will help make the moves affordable for business. Our goal is to build a renewed culture of savings in New Zealand with significant benefits for the entire economy.”

Peter Dunne said employers around the country had been working hard on the introduction of their contributions.

“We know that businesses throughout New Zealand have put a lot of effort into making next week’s changes happen,” Mr Dunne said. “By and large feedback from employers has been positive, and we thank them for their hard work.

“If we build a large pool of domestic capital through KiwiSaver, there will be more money available for investment in Kiwi businesses, and we will all win out of this scheme.

“Inland Revenue will work in the months ahead to address any teething issues that remain with the scheme. It is true that the surprising number of enrollees in KiwiSaver has put some pressure on resources, but employers have been very patient as issues have been worked through.”

ENDS

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