Kiwisaver scheme takes another step closer to reality

One of the Government's flagship policies -- Kiwisaver -- took another step closer to reality today with six companies selected as default savings providers officially signing up.

The companies will act as the fallback workplace saving scheme if a worker or their company does not nominate a preferred Kiwisaver savings option.

Finance Minister Michael Cullen said today's signing ceremony at Parliament marked the "excellent progress" being made ahead of the planned launch date of July 1.

The six default providers selected through a tender process are:

* ASB Group Investments;
* AMP Services (NZ);
* ING (NZ);
* Mercer Human Resource Consulting;
* National Mutual Corporate Superannuation Services (trading as AXA New Zealand); and
* Tower Employee Benefits.

Kiwisaver is a voluntary workplace saving scheme where employees elect to contribute 4 or 8 per cent of their gross salary.

People starting a new job from July 1 will automatically be enrolled and have eight weeks to opt out.

The Government is providing a $1000 contribution as a sweetener to new savers and paying some scheme fees to improve the returns.

Employer contributions to employees' Kiwisaver schemes will be exempt from tax, subject to a cap of 4 per cent of the employees' gross salary.

Employers and employees will be able to choose from a range of saving schemes as their Kiwisaver vehicle.

If no scheme is nominated Inland Revenue will randomly select one of the default providers which will allocate the employee to a conservative investment product.

- NZPA