The laws on children being signed up to KiwiSaver are to be tightened to stop well-meaning family members from joining them up to something they cannot get out of.
Anyone can sign up someone under 18 to the retirement savings scheme, and once the child has an income - whether
it is a paper round or part-time job - he or she has to contribute unless choosing to take a contribution holiday.
But changes proposed as part of a tax bill to be presented to Parliament before Christmas will restrict sign-ups to the legal guardian for under-16s and 16- and 17-year-olds will have to jointly sign with their legal guardian to give permission for it to go ahead.
Those without a legal guardian will also have to sign forms giving their permission.
Revenue Minister Peter Dunne said the change was designed to stop family members like well-meaning grandparents from locking a child into something that child might not want to contribute to later in life.
"We don't think anyone has done it malevolently ... but it's become a bit messy all around."
Mr Dunne said the Government did not know the number of teenagers who were already in this situation, but a number of instances had been noted.
KiwiSaver was designed as a workplace savings scheme but the $1000 kick-start received by all those who signed up encouraged people to sign up children for what was perceived as "free money", something widely encouraged by KiwiSaver providers.
About 160,000 of the 1.2 million people who have joined KiwiSaver are under 18 but fewer than 10 per cent actually contribute to it.
Earlier this year Government Actuary David Benison said he was concerned that KiwiSaver would get a bad reputation from people signing up their children, only to have the money whittled away by fees before they could start contributing.
He has encouraged those who sign up children to treat it as a savings account and keep contributing.
The changes are expected to come into force from July next year.
