KiwiSavers will have to leave $1000 in accounts

Financial rating agency Canstar is predicting increased competition over fees for KiwiSaver funds this year. Photo / Thinkstock

First home buyers who want to use their KiwiSaver savings to get on the property ladder will have to leave at least $1000 in their accounts in future in order to keep them open.

The change is part of the tweaks being made to the KiwiSaver Act as a result of the $1000 kick-start being removed in the wake of Thursday's Budget announcements.

From April 1 savers have been able to remove all of their contributions, their employers' contributions and the member tax credits from their savings to put towards a house.

But the $1000 kick-start was not allowed to be removed for buying a home.

Now the subsidy has been canned savers will have to leave money which could otherwise have gone towards their deposit in the account.

The alterations also allow KiwiSaver providers not to be prosecuted for having incorrect information in their prospectuses and investment statements under financial markets legislation.

Providers have until June 22 to insert a written notice in the documents telling prospective savers about changes to KiwiSaver.

The changes can be seen here.