$1000 KiwiSaver kickstart canned
The Government has been accused of "raiding the piggybanks of the next generation" after scrapping the $1000 kickstart for new KiwiSaver members.
Finance Minister Bill English has announced that people enrolling in the retirement savings scheme from 2pm on Thursday will no longer receive the one-off incentive.
That was because of its "considerable costs for taxpayers", with $2.5 billion paid out since the scheme began in 2007.
After allowing for compound interest over a 40 year working life, those who have missed the boat will have $10,000 to $20,000 less in their accounts at retirement age.
Financial Services Council (FSC) boss Peter Neilson said the move sent a terrible signal to younger New Zealanders.
"This is like a parent raiding their own child's piggy bank to pay for a round of drinks already promised down at the pub," he said.
Neilson said it was a pity that the Government's failure to manage its own finances would hold back some younger New Zealanders' own futures.
The FSC is the industry body for Kiwisaver providers, who earn most of their fees based on the total value of funds they manage.
English said KiwiSaver members would continue to receive an annual tax credit of up to $521, at a cost of $705m in the new financial year.
However, Massey University retirement savings expert Dr Claire Matthews said it had already been halved from $1024, and warned it could be the next to go.
"I would not be surprised to see that disappear. But I don't think it's going to go in a hurry," she said.
Matthews said the tax credit was very important for people on lower incomes, but the removal of the kickstart was less of a big deal.
"It was going to happen at some stage, it was just a matter of when. Given the proportion of Kiwis signed up to KiwiSaver now, it's probably as good a time as any."
Matthews said it was possible the removal of the voluntary incentive could be a step toward introducing compulsory membership.
"I'm not opposed to compulsion, if that's brought in at some stage," she said.
Bankers' Association boss Kirk Hope said removing the kickstart was understandable from a cost perspective, but he called on the Government to commit to beefing up rules around enrolment.