Changes to the workplace savings scheme KiwiSaver will save the Government $2.6 billion over the next four years.
Finance Minister Bill English unveiled the cost-saving measures in the Budget on Thursday, saying they make the scheme more financially sustainable.
The Government is removing the tax-free status of employer contributions into the workplace savings scheme, and from April next year those payments will be taxed at an employee's marginal tax rate.
From June 2012, the KiwiSaver member tax credit will be cut from $1 to 50c for every dollar saved by members.
The maximum tax credit will be $521 a year, half that of the maximum at present.
Compulsory member and employer contributions will increase from 2% to 35, but not until April 2013.
The $1000 kick-start for new KiwiSaver members remains unchanged.
Mr English says reducing Government borrowing and increasing private contributions to KiwiSaver will lift national savings.
