Wednesday 13th June 2007
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She says the changes to the scheme unveiled in last month’s budget, KiwiSaver Mark II, provide New Zealanders with clear incentives to join the scheme, which the previous version failed to achieve.
She says the effects of compounding and regular savings are powerful, but they become significantly more powerful once the new incentives are factored in.
Wozniak says it is inevitable that KiwiSaver will change savings behaviour and see a reduction in some forms of saving, however total savings should increase significantly.
Research by Australian Treasury suggests that more than 60% of every dollar saved in their compulsory super scheme is new savings.
“While many had doubts as to whether KiwiSaver Mark I would succeed in delivering higher savings in New Zealand, KiwiSaver Mark II has generated a new enthusiasm,” she says.
The government yesterday added some of the final touches to the scheme. signing of an Order in Council that bring into effect both the annual fee subsidy to be paid to members and the rules governing the use of KiwiSaver to help repay the mortgage on the family home.
Under the new regulations, the government will pay $40 a year into members’ accounts to subsidise the fees charged by scheme providers.
The mortgage diversion facility will allow members to divert up to half their contributions to repaying the mortgage on their home, so long as the mortgagee and the scheme provider agree.
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