If you prefer not to invest 4 or 8% of your gross income, you can still join KiwiSaver directly with a provider, save the minimum $1042.86 per year and still qualify for the full Government top ups (Kickstart, Member Tax Credits and Fee Subsidies). You can then focus the rest of your savings into either a mortgage or other investment fund that offers more flexibility.
As AndrewandJane said if you sign up your children they can have a nice small nest egg when they turn 18. Over 13 years (5 yrs - 18 years) the Government Contributions would be worth something like $2600 (based on 5% net return after fees which may be a little optimistic) Plus the minimum contributions the Kiwisaver Scheme requires (at least $5-10 per week).
Once your children were working for 5 years (paying PAYE) and were at least 18 they could also be entitled to the First Home subsidies.
KiwiSaver is also available to Self Employed people, and possibly people from overseas who have a principal base in NZ at time of joining.
Self employed people or people in NZ who are working for an overseas company would not receive Compulsory Employer Contributions from April 2008. But they do get the Kickstart ($1000), Member Tax Credits (up to $1042.86) and Fee subsidy of $40 per year (paid in two 6 monthly installments).
People who are in NZ and are not working may also be eligible to join KiwiSaver and gain the Kickstart, Member Tax Credit and Fee Subsidies.
Shawn