The Government is planning to change its KiwiSaver policy to increase the top-ups for workers on modest incomes - costing an additional $700 million over five years and soaking up all the savings it expected for its tax cuts package.
National had proposed to help pay for its tax cuts package by lowering workers' minimum Kiwisaver contribution from 4 per cent to 2 per cent and capping the Government's top-ups at 2 per cent of workers' income.
Yesterday Prime Minister John Key revealed the Government was likely to change its stance by matching savings dollar for dollar up to $1040 so that those earning less than $52,000 were not disadvantaged.
"If you earned $52,000 a year, you pay in at 2 per cent you'd have $1040 as your member tax credit but if you earned $26,000 a year and paid in at 4 per cent under the policy we had you would only be matched at $520," Mr Key said.
However, the package is expected to cost $700 million over five years and will soak up the forecast $580 million in savings for the tax cuts package over the same period.