Most New Zealanders want a comfortable retirement with enough money put aside to do the things they enjoy. Unfortunately, many of us aren't saving enough to make this possible. KiwiSaver is a great way to put money aside to help you have the future you want. Here's how it works.
Who can join?
You are eligible to join a KiwiSaver scheme if you:
- are a New Zealand citizen or entitled to permanent residency in New Zealand; and
- either:
- live or normally live in New Zealand; or
- fulfil all of the following criteria:
- are an employee of the State services; and
- are serving outside of New Zealand; and
- are employed on New Zealand terms and conditions; and
- are serving in a jurisdiction where offers of a KiwiSaver scheme membership are lawful; and
- are aged below the qualifying age for New Zealand superannuation (currently 65).
How to join KiwiSaver?
The process you need to go through to join KiwiSaver will depend on your personal circumstances:
If you are employed
You can "opt in" to KiwiSaver and select your own KiwiSaver provider and scheme - simply request an investment statement and complete the enrolment form for your chosen KiwiSaver scheme. Inland Revenue will then notify your employer to start deducting your contributions from your salary or wages.
Alternatively, you can join KiwiSaver through your employer. Request Inland Revenue's KS2 form from your employer, then complete and return it to your employer. Your employer will notify Inland Revenue that you have joined KiwiSaver and you then have two further options:
- Select your own KiwiSaver provider and scheme by completing and returning the enrolment form of your chosen scheme.
- Do not select a KiwiSaver scheme, and be enrolled into your employer's chosen KiwiSaver scheme. If your employer does not have a chosen KiwiSaver scheme, Inland Revenue will automatically select one of the six default KiwiSaver providers and you will be enrolled in that scheme.
If you are self-employed or not employed
You will need to select your own KiwiSaver provider. To do this, simply request an investment statement and complete the enrolment form for your chosen KiwiSaver scheme. Your KiwiSaver provider will notify Inland Revenue that you have joined KiwiSaver.
Can I opt out of KiwiSaver?
If you are changing jobs or starting a new job you will be automatically enrolled into KiwiSaver if you are eligible and you have not already joined. You can choose to opt out of KiwiSaver by giving an opt out form to your employer or Inland Revenue between the end of the second and eighth week after starting your new job.
What are the benefits of KiwiSaver?
KiwiSaver has many features including:
- $1000 kick-start contribution from the Government when you first join,
- matching Government contributions up to $1042.86 per year (subject to eligibility),
- benefits for first (and second-chance) home buyers.
To find out more take a look at the KiwiSaver benefits page.
How do contributions work?
If you're eligible, you can join and contribute to KiwiSaver.
If you're employed
You can choose to contribute 2%, 4% or 8% of your gross salary or wages. If you don't select a contribution rate when you first join KiwiSaver the default rate of 2% of your gross salary or wages will apply.
Your contributions will be paid by your employer to Inland Revenue, who will hold your contributions for the first three months, before paying your contributions (plus interest) to your chosen KiwiSaver scheme for investment.
If you are self-employed or not employed
You can make contributions to your KiwiSaver scheme either by making regular contributions by setting up a Direct Debit with your chosen KiwiSaver provider, or you can simply make lump sum contributions at anytime.
It is important to note that some KiwiSaver schemes have minimum contribution rates; FirstChoice KiwiSaver currently has no minimum contribution rate.
Can I change my contributions?
Yes, you can change the amount that you contribute to KiwiSaver from your salary or wages to 2%, 4% or 8% by advising your employer. You need to either complete a KiwiSaver deduction form (KS2) or write to your employer. The change will take effect from your next payment of salary or wages.
You can only change your contribution rate once every three months unless your employer agrees to more frequent changes.
Please note, if you joined KiwiSaver prior to 1 April 2009, your contribution rate will not change to 2% unless you ask your employer to change it. Reducing your contribution rate to 2% may affect your matching Government contributions.
What is a contributions holiday?
12 months after your KiwiSaver scheme or Inland Revenue receives your first contribution (whichever is earlier), you can apply for a contributions holiday to stop contributions that you make, between three months and five years at a time.
You may also apply for a contributions holiday at any time (for a period of 3 months) if you are suffering, or likely to suffer, financial hardship.
Contributions resume at the end of the contributions holiday unless you apply for a further contributions holiday. You may at any time restart your contributions by giving notice to your employer.
If you are self-employed or not employed you can start and stop your contributions at any time so contribution holidays do not apply to you.
Can I withdraw my money?
Your savings in a KiwiSaver scheme are generally locked-in until the age of eligibility for New Zealand Superannuation (currently age 65) or for five years from the date you become a member of a KiwiSaver scheme and/or complying superannuation fund (whichever is later).
Early withdrawal of KiwiSaver funds is only allowed in limited circumstances, such as permanent emigration, significant financial hardship, serious illness or for a first home purchase. Depending on the type of withdrawal, this may exclude the Government kick-start and matching Government contributions.
There are specific criteria for any withdrawal, requiring supporting information to be provided.
Disclaimer
A copy of the Investment Statement for the FirstChoice KiwiSaver Scheme ("FirstChoice KiwiSaver") is available here or by calling 0800 1ST CHOICE (0800 178 246).
