Small 'but significant' changes to Kiwisaver to be made

Last updated 00:00 13/08/2007

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The Government is proposing changes it says will give those in superannuation schemes which comply with Kiwisaver rules more protection and allow savers better access to their funds in retirement.

The Government will make the changes to a tax bill that is already going through Parliament.

Three ministers today issued a joint statement saying the changes were small but significant fine-tuning of the proposed Kiwisaver legislation.

The changes included:

Requiring complying funds as well as Kiwisaver funds to lodge employer participation agreements with the Government Actuary. These employer agreements set out conditions under which employees were scheme members. The Government said this measure would give greater protection to employees by ensuring there was government oversight of employers' involvements in these funds.

Allowing benefits in complying superannuation funds to be withdrawn as a lump sum. Members of complying schemes would be able to take a lump sum or buy an annuity when they were eligible to access their savings, a provision which already applied to Kiwisaver schemes. As legislation stands, members of complying funds may be forced to buy annuities at extra costs.

Avoiding double-dipping. Members of some existing superannuation schemes in the state sector already received a contribution from the Crown as their employer. This would continue unchanged. However, the legislation would be amended to provide extra assurance that if those people also joined Kiwisaver they would not be able to receive additional employer contributions.

As had been previously announced, the legislation would be amended to make sure that people received the tax credit of up to $20 a week from the time they joined Kiwisaver.

As the legislation was currently worded, some Kiwisaver members would not become eligible for the tax credit until several weeks after they began making contributions.

Under the proposed law change, the member tax credit would apply from the first of the month in which the contribution was made so that, for instance, all contributions that began in July would be matched by a tax credit from July 1.

The ministers said the changes would be made to the Taxation (Annual Rates, Business Taxation, Kiwisaver and Remedial Matters) Bill which was before Parliament.

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- NZPA