SoundFinance
Helping Create Freedom For Life
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There are three main changes to KiwiSaver to be implemented progressively:
- The maximum Member Tax Credit (MTC) will be halved from $1 to 50c for every dollar a member contributes, up to a maximum of $521 per annum. To be eligible to receive the maximum MTC ($521.43 per annum) you still need to contribute $1,042.86 per annum.
This change will relate to your contributions made from 30 June 2011 onwards, but because the MTC is paid annually in arrears, you will not receive the new MTC amount until after 30 June 2012.
- Currently, contributions up to 2% from employers are exempt from Employer Superannuation Contribution Tax (ESCT). From 1 April 2012, all contributions from your employer will be subject to ESCT at your marginal tax rate.
- From 1 April 2013, it is proposed that the minimum employee and employer contributions will rise from 2% to 3%.
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In a pre-budget speech the Prime Minister, John Key, spoke of reducing the KiwiSaver Member Tax Credits but retaining the $1,000 Kick Start. KiwiSaver members and employees would be expected to contribute more rather than relying on the Member Tax Credits which are up to $1042.86 ($20 a week) each year. These are paid by the Government to the individual’s scheme.
“None of the changes we will be making will affect people before the election so New Zealanders will be voting with all the information they need and can make their own choices”.
The Working for Families programme and the student loan scheme are all set for a trim in the May 19 Budget. The Budget would contain “significant savings, but will by no means be a slash and burn Budget.”
The student loan scheme would also be in for adjustment but would remain interest-free.
"The changes we are making in the budget will make all of these programmes more affordable and ensure they survive into the future," Mr Key stated.
AFA
As an Authorised Financial Adviser in Christchurch Lyn Bell has passed the requirements of the Financial Markets Authority and is legally qualified to provide financial services to her clients throughout New Zealand.
Lyn’s registration can be viewed at www.fspr.govt.nz. Lyn can also be found at the Financial Markets Authority website.
A disclosure statement is available free on request
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