KiwiSaver providers could introduce minimum amounts for opening new accounts or minimum saving requirements in the wake of the Government's snap decision to cut the $1000 kick-start.
The incentive which was available to everyone who signed up to the retirement savings scheme had been a buffer should account fees or a downturn in the market eat into savings.
But Bill English's Budget announcement last Thursday instantly removed the $1000 grant, taking away that security and opening up the potential for low-balance accounts to be eaten up by fees.
Those most at risk include children signed up since the Budget who no longer qualify for any incentives and the self-employed who do not receive employer's contributions and may not contribute much themselves.
Therese Singleton, AMP general manager investments and insurance, said there were several practical and legal ramifications of the removal of the kick-start for new joiners.
"The main issue is where the balance is close to the point where it won't be sufficient to cover the fees charged by the provider ... [that is] there is no employee or employer contribution," Singleton said.
"We imagine most providers will either look to set a minimum initial and ongoing contribution level or a commercial decision will be made on whether fees would be absorbed by the provider for this market subset."
Singleton said AMP had yet to make a decision on what it would do.
Jonathan Beale, ASB general manager wealth, said it had decided not to charge fees on any account where it would take the balance below zero and was not planning to introduce a minimum amount for setting up a new account. But it was clear it did not make sense to sign children up for KiwiSaver now unless people were going to save regularly.
"There is absolutely no point in setting it up now unless you are contributing to it."
KiwiSaver providers charge an annual fee of about $30 to $40 plus a management fee, usually a small percentage of the amount in the account.
Beale said people would need to put more than $100 a year into their children's account to make headway. Similar investment products outside KiwiSaver, called managed funds, require a minimum $2000 start-up or a regular investment of $100 a month.
Bekki Pope at KiwiWealth, Kiwibank's KiwiSaver scheme, said any change would be weeks away.
"It would require a change to our offer documents if we did decide there was a minimum amount. So it wouldn't be a quick decision."
A Westpac spokeswoman said it was working through the detail of the Budget announcements including whether to introduce minimum amounts for opening an account.
"In the meantime we are able to waive the administration fee should a negative balance arise."