AUCKLAND, New Zealand – Concerned about the lack of savings and the increase in consumer debt, the New Zealand government has announced a work-based savings scheme that will include a kick-start deposit of NZ$1000 (US$675). Called KiwiSaver, the program will be administered by the Inland Revenue Department (IRD) which is the New Zealand version of the U.S. Internal Revenue System. The program is effective April 2007. This might reduce some credit union savings, but if it encourages more savings, New Zealand Association of Credit Unions (NZACU) CEO Doug McLaren is for it. "Credit unions will still play a vital role in helping children, retirees, people on welfare and the average New Zealander. We don't think that people who already have a savings plan in place with the credit union will suddenly take all their money out and place it with the IRD – but we do think it will encourage them to save more." He said that the average credit union savings balance jumped by NZ$500 (US$337) between 2003 and 2004. Debt growth is increasing faster than asset growth, with most asset growth being in increased value of homes. The IRD will select by bid providers where the deposits will be held. Credit unions will be able to bid to be a provider. Because the program is so new, no credit union at press time had announced if it will bid. According to the plan, employees will set aside between 4-8% of their wages into a locked account that will be available at retirement. An alternative account will be provided for the self-employed. Withdrawals can be made for hardship, permanent emigration or for the deposit of a first home after three years. Depending on the length of time in the program savers may receive up to NZ$5000(US$3374) toward the purchase of their first home. The account can be shifted between approved financial providers. Deductions can be modified anytime and can even be stopped. If the saver does not choose his own financial services provider, a default provider will be named. The government will cover all management costs for the account. If an employer already offers such a program, they do not have to participate if they meet three conditions: the savings are portable if the employee leaves, it is open to all employees, and the total contribution of the employer and employee is at least 4%. These employees will still be eligible for the first home deposit subsidy. Although the program is voluntary, new employees are automatically signed up when they start work, but can opt out after three weeks if they so wish. The government estimates the costs of the program for the first three years will be NZ$665 (US$449) million if they reach their targets of 415,000 savers by July 1, 2010.