What is KiwiSaver?

A voluntary savings scheme set up by the government in 2007, through the Department of Inland Revenue.

KiwiSaver is designed for long-term retirement saving. E.g. If you are an employee and belong to KiwiSaver, you make regular contributions from your pay and your employer pays the equivalent of 3% of your pay. This money is then invested in a KiwiSaver scheme managed by a KiwiSaver provider (you can choose which one).

Also, the government pays an annual tax credit to eligible members, and funds the KiwiSaver HomeStart grant, to help eligible members buy their first home.

Not a member? Learn more about KiwiSaver: www.kiwisaver.govt.nz/new/

What are the changes?

  • Employee contributions
    • As of 1 April 2019, there are more contribution options: 6% & 10%
  • ‘Savings Suspensions’ for employees
    • Previously called Contribution Holidays
    • As of 1 April 2019, changes include re: maximum length of suspension.
  • More KiwiSaver options if you’re over 60
    • Will apply from 1 July 2019, re: joining KiwiSaver / withdrawing money.

Let’s take a closer look…

Employee contribution options

If you’re an employee, you can now choose to have contributions from your salary/wages deducted at 3%, 4%, 6%, 8%, or 10%. If you don’t choose, the default contribution of 3% will be applied.

You can change your contribution rate by giving your employer a letter saying what rate you want to change to, or by giving your employer a KiwiSaver deduction form (KS2)

You can change once every three months or more often if your employer agrees.

If you're not an employee, in most cases you can contribute whatever you like, voluntarily. Though some KiwiSaver providers have a minimum annual amount and/or how often payments need to be made.

Note: If you’re eligible for employer contributions, their contribution will still be at 3% of your pay.

‘Savings Suspensions’ for employees

The name has changed and previously, contributions could be stopped for up to five years. The savings suspension is now for a maximum of one year, then you would need to renew it.

While you’re on a savings suspension, your employer is not required to make compulsory employer contributions.

A savings suspension may also affect your entitlement to the government contribution and KiwiSaver HomeStart Grant:

  • To get the maximum annual Government Contribution (previously called ‘Member Tax Credit’) of $521.43, you would need to contribute a total of $1,042.86 for the year up to 30 June.
  • One of the eligibility criteria for the HomeStart Grant is to have been regularly contributing the minimum allowable percentage of your total income, to KiwiSaver.

Learn more about Savings Suspensions: KiwiSaver website

More KiwiSaver options if you’re over 60

To help more New Zealanders join KiwiSaver, people over age 65 can now become members. If someone joins KiwiSaver after the age of 60, their funds will no longer be locked in for five years - from age 65 they will be able to withdraw money. Withdrawing funds will mean however, that they’re no longer eligible for compulsory employer contributions or the Government Contribution.

See Department of Inland Revenue summary of the changes:
www.ird.govt.nz/campaigns/2019/kiwisaver-2019/kiwisaver-2019.html

Prepare for Your Future

Love My Money has simple yet powerful online tools, calculators and Journeys to help you, including the ‘What I’m Worth’ Journey.

Use the Journey to work out your current net worth and forecast where you may be financially in 5/10/15/20 years from now. You can then create and view different scenarios: e.g. increasing your retirement savings.