New Zealanders who sign up to Kiwisaver from today will no longer get a $1000 "kick-start" payment.
The payment, which has been in place since 2007, was scrapped in today's Budget, effective immediately. The change did not affect existing Kiwisaver members.
Finance Minister Bill English said Kiwisaver was a successful scheme, with members now numbering 2.5 million.
But it had also created "considerable costs" for taxpayers. Government had spent $2.5 billion on the kick-start payment alone in the eight years the scheme had been running.
The scrapping of the subsidy would save Government $125 million a year over the next four years. The minister said this money would be reinvested into "priority public services".
The annual tax credit of $521 would not be changed.
Employers would still be required to contribute at least 3 per cent of a worker's pay packet and employees would still make their own contributions.
The National-led Government has gradually pared back the Kiwisaver scheme in previous budgets, reducing the government contribution.
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Mr English defended the latest change, saying that the employer contribution and the annual tax credit meant people would still have an incentive to sign up to Kiwisaver.
In total, the Government would spend $850 million on the scheme this year, through the ongoing cost of the government contribution to Kiwisaver, worth $521 per member, and the kickstart payments claimed so far.
In the next financial year, the Government was forecast to spend $705 million on the tax credit and $12.3 billion on New Zealand Superannuation.
