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KiwiSaver's lowest lowest monthly intake

ELOISE GIBSON
Last updated 05:00 12/05/2012

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The flow of people joining KiwiSaver has slowed to the lowest monthly intake since the scheme began, in defiance of what had become a traditional pre-Budget spike.

Membership had been rising faster this year but new enrolments dipped to 14,000 in April, taking the average for the year to 17,000 new members a month, according to IRD figures made public by KiwiSaver provider Tower.

If the average monthly sign-up rate stays constant, membership will top 2 million by the end of September.

The Government has confirmed it will not tinker with tax credits in the upcoming Budget.

Previous Budgets altered KiwiSaver entitlements to make the scheme cheaper to run, including halving the annual tax credit and taxing employer contributions.

Other years the IRD has recorded a pre-Budget spike in enrolments.

People who are enrolled when they start a new job have the option to leave again. If they do nothing, they are automatically put in a scheme run by one of the six default providers.

The scheme now has 1.93 million members, 25 per cent of whom are in default schemes. Over 64 per cent chose to join the scheme they are in, while the rest went into a scheme their employer chose.

A further quarter of a million members could be added by Government plans to stage a one-off auto-enrolment if it returns to surplus by 2014/15, catching people who have not changed jobs during the life of the scheme.

Savings industry group Workplace Savings NZ has welcomed the Government's comments indicating tax credits would not change again this year.

"Since it was first established KiwiSaver has been subject to `design tinkering' in just about every Budget, so this will be a refreshing change," said chairman David Ireland.

The minimum employee and employer contribution is set to rise from 2 per cent to 3 per cent in April next year as part of changes already announced.

As at the end of March, 254,000 people had been enrolled in the scheme and opted out again.

A further 78,100 were on a contribution holiday, including people suffering financial hardship. Fairfax NZ

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- BusinessDay.co.nz

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