KiwiSaver breaks through half-million mark

500,000 New Zealanders are planning for their future and are now enrolled in the Labour-led Government’s KiwiSaver scheme, Prime Minister Helen Clark, Finance Minister Michael Cullen, and Revenue Minister Peter Dunne announced today.

The half-million milestone was reached late last week, less than eight months after the scheme’s launch last year. Initial projections were for KiwiSavers to number just over a quarter million within 12 months.

“KiwiSaver is a huge success. There are already $600 million invested in KiwiSaver accounts. When the Labour-led Government first signed off on this plan for the future in 2005, we were confident it would build a new culture of savings over time.

“But it is fair to say that no one thought New Zealanders would respond to the scheme with such incredible enthusiasm. KiwiSaver makes it easier than ever before to save for retirement and will help many families buy their first homes,” Helen Clark said.

Helen Clark said that KiwiSaver takes another major step forward next week with the introduction of employer contributions and tax credits.

“Employers with staff enrolled in KiwiSaver will be required to contribute one per cent of their employees’ salary to their KiwiSaver accounts from 1 April. This will rise by an additional one per cent until 2011 when four per cent contributions will be required,” Helen Clark said.

“One of the most gratifying elements of the scheme’s success to date has been the large number of young people who are starting a savings habit. Over 100,000 KiwiSavers are under 25, the majority of whom would be new savers,” Michael Cullen said.

“These young people are in a position to build up a very substantial savings base over time and will see their standard of living in retirement improve significantly as a result.”

Peter Dunne said that the substantial pool of capital being built through the scheme will be a major asset to the New Zealand economy in years to come.

“Not only will individual savings rates improve, but our very low national savings rate and worryingly high current account deficit will be given significant boosts from KiwiSaver,” Peter Dunne said.