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Source: ONE News -
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The government's proposed changes to KiwiSaver are concerning some contributors who feel the extra burden on them could be too much.
In a speech today, Prime Minister John Key said the government contribution to the scheme will be cut back and businesses and workers will have to pay more, as it tackles with a possible $16 billion deficit in public finances.
Darryl Evans is the manager of a budgeting service, and even with his expertise in dealing with money, he told ONE News the extra contribution will be difficult to deal with.
"I don't know how we can contribute anymore than we already are," he said.
"We're already contributing $8,000 or $9,000 a year towards KiwiSaver on behalf of the staff as an employer contribution."
Key said the $1000 kick start for new account holders will be kept, but the government tax credit of $1040 a year will be reduced.
To make up for that, the 2% minimum contribution from workers will increase along with the 2% contribution from employers.
Receptionist, Helen Brierley, said the changes could discourage people to use the scheme.
"The 2% that I'm contributing, even though its only 2%, it's actually quite a lot getting taken out for me...I need it for the kids' milk, bread, sugar and things."
Labour leader Phil Goff said the changes would be a greater burden on people.
"This is going to cost people more who are KiwiSavers because they will be picking up at least some of the contributions that the government previously made," he said.
But Key said the increases would be manageable.
"I would characterise those increases as affordable and for the vast bulk of people, both businesses and individuals, they will be able to make that change.
"If an increase was to happen tomorrow in employer cross subsidies on Kiwi Saver, it would cause affordability problems for employers right now because right now of course they are going through tough times," Key said.
The changes will see more savings going into the government's accounts with KiwiSaver funds projected to rise from $8 billion now, to $25 billion by 2015 and nearly $60 billion in 10 years.
Twenty thousand people join the scheme each month, with 1.7 million people so far signed up.
However, experts say that changing KiwiSaver will encourage people to look at other schemes which give people greater access to their savings.
Geoff Rashbrooke from Victoria University said with so much pressure on consumers to spend, some are choosing to keep their money more readily available.
"Smart people have looked at it (KiwiSaver) and said I'll just put in enough to get the maximum tax credit and I'll put my money somewhere else where I can get hold of it or spend it," he said.
"I think the government needs to look at that."
The proposed changes to KiwiSaver will only happen if National wins November's election, and Key said it is up to the public to decide if they are willing to go along with them.
The full details will be revealed next Thursday when the Budget is announced.
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