12 Jul 2008

Law change planned to stop Kiwisaver abuse

3:18 pm on 12 July 2008

The Government plans to get tough with employers it says are abusing the KiwiSaver scheme.

It is proposing a law change because it says some employers are giving smaller pay rises to workers who are in the scheme, to cover the costs of the employer contribution.

The Government says in some situations employees in KiwiSaver have been paying the employer's contribution out of their own salary.

It says in bad cases the employee is getting a 1% pay cut, which the employer uses to pay their compulsory contribution.

The employer then pockets the $20 per week tax credit the government provides.

The matter was originally left to employers and employees to agree, but the Government says that clearly has not happened in certain cases.

Labour Minister Trevor Mallard says it is particularly an issue for employees on 'total remuneration' packages.