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Quick Guide to KiwiSaver

KiwiSaver is a NZ Government-supported (but not guaranteed) voluntary superannuation savings scheme, designed to help New Zealanders save for their retirement. It's a flexible work-based savings initiative, with a wide range of membership benefits.

If you are currently employed, you can choose to contribute 2%, 4% or 8% of your gross wage or salary towards your KiwiSaver fund, until you reach the present retirement age of 65. All employees are also entitled to a compulsory employer-contribution of 2% of your their gross wage or salary.

Please Note In the 2011 Budget, the NZ Government announced several intended changes to KiwiSaver over the next two years, such as raising the minimum employee and employer contribution rates from 2% to 3% from 1st April 2013 (see IRD website for details).

Some helpful FAQ's on KiwiSaver

How does KiwiSaver work?
If you join a KiwiSaver fund, each time you are paid by an employer, an amount equal to either 2%, 4% or 8% (your choice) will be deducted from your before-tax wage or salary, which your employer will send to your KiwiSaver account.

This will be matched by your own contribution plus the NZ Government's “kick-start” $1,000 and other “member tax credits”. You, your employers and the NZ Government will continue these contributions until your retirement age (currently 65), then you can access the funds to help you when you have retired and your income is less than when you were working.

You can refer to the KiwiSaver site for a simple diagram explanation of how it works.

Is KiwiSaver compulsory?
KiwiSaver is a voluntary retirement savings fund, however, most professional investment advisors recommend taking advantage of the Government's “kick-start” contribution added to your own and your employer's regular contributions. This will no doubt assist you in achieving a healthier financial position for your retirement years.

If you are 18 or over and start a new job with a new employer, you will automatically be enrolled with a KiwiSaver scheme (with some exceptions). You can “opt out” should you wish to not join KiwiSaver at any stage, similarly, you can “opt in” to KiwiSaver at any time you choose, but you can only belong to one KiwiSaver scheme at a time.

How much do I have to contribute if I join?
There is currently a minimum requirement for you to contribute 2% of your gross wage or salary. If you wish to accelerate your savings growth, you can choose to contribute either 4% or 8% of your gross wages or salary.

From 1st April 2013, the minimum member and employer contribution will be 3% of your before-tax wage or salary (see IRD website for 2011 Budget changes)

How much does the NZ Government contribute towards my KiwiSaver fund?
The NZ Government gives each new KiwiSaver account a $1,000 “kick-start”, which is not accessible until you reach the age of eligibility for NZ Superannuation, which currently 65.

If you are 18 years old or over, you will also receive a further NZ Government contribution called a “member tax credit” of 50 cents for every dollar you contribute, up to a maximum of $521 per year. You can find out more information of this “member tax credit” on the Govt's KiwiSaver website.

How much does my employer have to contribute if I join?
Currently, employers are required to contribute a minimum of 2% of your gross wage or salary, or match your contribution (unless your employer is already contributing towards a superannuation scheme in your name). Employer contributions that match yours are currently tax-free to a limit of 2% of your before-tax income.

Do I have to be employed to join KiwiSaver?
You do not have to be currently employed to join a KiwiSaver scheme. However, you do have to be a NZ Citizen (or entitled to live in NZ permanently), currently residing in NZ and be under the age of 65.

Can I access my KiwiSaver funds?
The purpose of KiwiSaver is to help NZ’ers save for their retirement. Currently, the only time a contributor can access their KiwiSaver funds is when they are purchasing their first home (see Housing New Zealand website for more details on eligibility and criteria).

What happens if I change jobs or employer?
If your employment situation changes, your KiwiSaver funds remain in place and your account transfers to your new employer, so they can begin making contributions to your account. If you are unemployed for a period of time, you can just put your contributions on “hold” until you start work again.

I hear my KiwiSaver funds can help us purchase our first home?
When you decide to buy your first home, you may be able to make a one-off withdrawal of funds from your KiwiSaver account to assist you with the purchase (some conditions apply). You will need to have been a KiwiSaver member for at least 3 years to make a withdrawal for this purpose.

The NZ Government may also be able to assist you in securing your first home with an additional $1,000 for every year you contribute to KiwiSaver (minimum of $3,000 to a maximum of $5,000 after 5 or more years). This first home subsidy is administered by Housing New Zealand, please visit their website for more information.

This first home subsidy may also be available to previous home owners if their financial position is similar to that of a first home buyer.

Can I choose which KiwiSaver provider and scheme that I join?
Yes, when you join KiwiSaver as a new member, you can either choose which KiwiSaver provider you wish to have manage your savings, or you can let your employer select their preferred provider or you can allow the Government to provisionally register you with one of the six default providers.

The NZ Government has approved a selection of reputable KiwiSaver providers, who can manage your savings and funds on your behalf. You can select one from the approved list of providers on PriceMe Money.

You can also choose the type of investment option that you think best suits your needs, ie a high, medium or low risk investment.

What is a KiwiSaver provider and scheme?
A KiwiSaver provider is a company that offers one or more KiwiSaver schemes and is responsible for managing your savings and funds in that KiwiSaver scheme. KiwiSaver schemes are offered by a wide range of organisations from large prominent banks to insurance companies and corporate and boutique investment/fund managers.

All KiwiSaver schemes are regulated in NZ by the Financial Markets Authority.

Can I change my KiwiSaver provider or scheme?
Yes, you can change your KiwiSaver provider and scheme at any stage.

What is the best KiwiSaver scheme for me?
The type of KiwiSaver scheme you elect to join will depend on a number of factors, such as your age, level of risk you're comfortable with and your retirement savings targets and goals.

Most KiwiSaver providers offer low-risk conservative schemes to the higher-risk aggressive growth schemes. The risk of each scheme is related to what each scheme invests in, ie what proportion of your funds will be invested in the various asset classes such as NZ or global property, NZ or global equities, NZ or overseas shares, bonds and cash etc.

For a good calculator to help you determine a suitable risk for your situation, you can try one of Sorted's calculators or use PriceMe Money's own calculator to help direct you to the most suitable investment.

What types of KiwiSaver investment funds are there?
Generally, most KiwiSaver investment funds fit into one of the following categories:

  • Cash - (low risk)
  • Conservative - (low to medium risk)
  • Balanced - (medium risk)
  • Growth - (medium to high risk)
  • Aggressive - (high risk)

KiwiSaver schemes offer a range of investment funds with the option for members to spread their investment between one or more of the provider's funds, achieving an ideal risk/ growth ratio to suit the member's financial and personal needs.

It's recommended to study a chart of investment categories and a typical asset mix for each one.

What fees will I be charged to manage my KiwiSaver scheme?
KiwiSaver providers are entitled to charge you various fees when they manage and administer your KiwiSaver fund. Some of the fees you may be charged are as follows:

  • Management fee
  • Trustee fee
  • Administration fee
  • Monthly membership fee
  • Entry fee
  • Exit fee
  • Switching fee

We suggest you consult with each KiwiSaver provider to find out their fees by using the comparative list of each KiwiSaver provider's fees on PriceMe Money. The fees you pay your KiwiSaver provider can determine how fast your investment fund grows, so this is an important consideration when deciding which KiwiSaver provider to join.

Disclaimer: This site is designed to assist you in determining whether KiwiSaver is the appropriate savings vehicle for your needs, and to help you find the right KiwiSaver scheme and investment category for your particular savings goals and targets.

We are not qualified financial advisers, and we suggest that you don't rely solely on the information contained within this site before making your investment decisions. We recommend you also speak with a qualified and/or independent financial advisor such as your bank manager, insurance agent, financial planner, share or mortgage broker and visit KiwiSaver's official website for additional information.