National is proposing a number of changes to the KiwiSaver scheme to ensure the party can afford its tax cuts scheme without extra borrowing.
The main change is reducing the minimum employee contribution from 4 per cent to 2 per cent and requiring employers to contribute only up to 2 per cent to the savers' fund.
The Government contribution will also be capped at $1040 a year or 2 per cent.
National said the changes would save $3 billion between 2008/2009 and 2011/2012.
Employees will be able to contribute a greater proportion of their salary, but employees will not be required to match it and the Government will not subsidise it further.
National will also drop the employer tax credit of $1040 which effectively subsidised the employers' 2 per cent contribution.
National would also allow employers and employees to negotiate trade-offs over pay rises and KiwiSaver contributions.
Other elements of the scheme are retained these include:
* The $1000 start up subsidy;
* Employer contributions exempted from employer superannuation contribution tax;
* Annual fee subsidy and first home subsidy retained.
National leader John Key said KiwiSaver would remain a very generous retirement income scheme but changes were needed to make it affordable in the long term and not just during economic good times.
Mr Key said National would consider making the scheme a 3 per cent minimum contribution scheme with a matching subsidy if and when economic conditions improved.
Net gains including KiwiSaver subsidies*
April 2008 to April 2011, $ per week
Household income Labour National
$557, not in KiwiSaver + $22 + $30
$557, in KiwiSaver + $38 + $27
$1114, not in KiwiSaver + $32 + $47
$1114, in KiwiSaver + $66 + $58
$2228, not in KiwiSaver + $55 + $76
$2228, in KiwiSaver + $122 + $98
Couple with 2 children
$557, 1 earner, not in KiwiSaver + $29 + $22
$557, 1 earner, in KiwiSaver + $46 + $19
$1114, 2 earners, not in KiwiSaver + $59 + $67
$1114, 2 earners, both in KiwiSaver + $93 + $74
$2228, 2 earners, not in KiwiSaver + $64 + $93
$2228, 2 earners, both in KiwiSaver + $131 + $115
*Includes compulsory employer and taxpayer contributions. Incomes are the median household income ($1114 pw), half that and twice that.
Source: Herald calculations.
- NZPA, NZ HERALD STAFF