The Government seemed hell-bent on destroying New Zealand's saving culture, Labour finance spokesman Grant Robertson said yesterday.
New enrolments for the ANZ Investments KiwiSaver scheme had plunged by 50%, an inevitable result of the Government chopping the $1000 kick-start initiative.
''This is a huge backward step. New Zealand's savings rate is far too low and KiwiSaver saw a big improvement in our savings, so this makes no sense.''
Labour was committed to the KiwiSaver scheme it started, Mr Robertson said.
Although Labour was reviewing its superannuation policy, it still intended reintroducing the $1000 kick-start, he told the Otago Daily Times.
ANZ Wealth New Zealand managing director John Body urged the public not to give up on KiwiSaver because of the loss of the kick-start benefit for new members.
KiwiSaver remained an excellent savings vehicle, with many benefits for members.
Someone working and contributing to KiwiSaver would probably have their employer matching their contributions.
Eligible members could still receive the Government's annual contribution of up to $521, provided they contributed $1042 during the year.
A 25-year-old, earning the median wage of $45,000 a year and contributing 3% of their salary, would receive $20,000 in Government contributions and another $74,000 from their employer by the time they reached 65, he said.
On the same basis, the $1000 kick-start they originally received at 25 would have grown to only $3000 by the time they were 65 - less than 2% of their projected retirement balance of $202,000.
But the removal of kick-start had hit people's confidence in the nation's retirement savings scheme.
An ANZ survey of 1200 people conducted earlier this month showed 63% of people who had not yet joined KiwiSaver were now less likely to join now the kick-start had been scrapped, Mr Body said.
The survey also found about 40% of people were less confident about the future of KiwiSaver as a result of the change and 52% of people were saying they were concerned the Government would make other changes to KiwiSaver in the future that would affect their savings.
It was vital any future changes to KiwiSaver were well-telegraphed so New Zealanders understood what was proposed, he said.
''More than 2.5 million New Zealanders have invested in KiwiSaver. It's clear any changes to the scheme are likely to make people uneasy.
''We need a no-surprises approach here so people don't lose confidence in KiwiSaver, because it's important to the whole country New Zealanders save for their retirement.''
Responding to a question in the House after making the KiwiSaver announcement last month, Prime Minister John Key said: ''The removal of the $1000 kick-start contribution will not make a blind bit of difference to the number of people who join KiwiSaver.''
