A KiwiSaver provider is urging the Government to stop tinkering with the savings scheme, warning people will lose trust in the system.
Retirement consultancy firm Mercer said the decision made the scheme less appealing to people wondering whether to join it.
Mercer New Zealand managing director Martin Lewington said the Government had moved the goal posts yet again.
"As soon as you start tinkering around with things, I think you chip away at the trust that has been built," he said.
"There could be a cohort of people think, uh uh, maybe I'll stay clear of this KiwiSaver just in case the rules change again."
Mr Lewington said the Government needed to start seriously thinking about the long-term viability of superannuation.
Meanwhile, a union representing low-paid workers said they would be hardest hit by the decision to axe the kickstart.
Service and Food Workers' Union head John Ryall said it would turn people off saving.
"Low-income workers were attracted because of the startup and with that gone, I think there'll be an increasing number of low-income workers who don't get into it."
Mr Ryall said, without KiwiSaver, many people on minimum wage would reach retirement with no savings at all.