The Government is expected to announce after the Cabinet meets today that it will amend its earlier KiwiSaver proposal so as to not disadvantage lower and middle-income earners.
National campaigned during the election that it would reduce the minimum employee KiwiSaver contribution from 4% to 2%, along with reducing the compulsory minimum employer contribution by the same amount.
People earning $30,000 under the Labour-led government received a $20 a week subsidy, or $1040 a year.
Under National, that would have reduced to $12 a week, while people on higher incomes would have retained their $20 a week subsidy.
The Otago Daily Times understands that meetings between the Government and the Council of Trade Unions has resulted in a rethink of the policy by the Cabinet.
The announcement expected today will be that the Government will match on a dollar-for-dollar basis an employee's contribution. If they were putting in 4%, the subsidy would return to $20 a week.
KiwiSaver systems were complicated and did not recognise whether the contribution was 2% or 4% of a salary. They only recognised the dollar amounts, the ODT was told.
It was easier to use the dollar matching formula.
Sources said the Government was worried that its opponents could during the next three years work the issue up into a symbolic "beating up" of lower paid workers, and that was not a battle the new Cabinet wanted to fight.
Also today, Prime Minister John Key is likely to announce the taxation Bills he wants passed in the next two weeks, two education Bills on national standards for literacy and numeracy and two or three Bills on law and order.
