KiwiSaver is a voluntary investment programme targeted at helping New Zealanders save for retirement. You can even dig into it to help you buy your first house. It is a voluntary insurance scheme to get you set for retirement. You will make frequent contributions from your salary and your company may deposit directly into the scheme.
This guide will provide you with all the information you need to manage your KiwiSaver account.
Who is KiwiSaver for?
Anyone can access the KiwiSaver program provided they meet a few requirements. You must be a resident of New Zealand or be able to live permanently in New Zealand and stay or reside in New Zealand. This means you cannot join KiwiSaver if you only have a temporary work permit, a tourist or a student visa.
You can join KiwiSaver in different ways. You can sign directly via a provider. If you’re under the age of 18, there are special rules. You can access KiwiSaver via the provider of the scheme. You can’t join KiwiSaver through your employer.
If you are between 16 and 17 years of age, you require at least one legal guardian to sign and return your application. If you do not have a legal guardian, please contact the preferred provider of the KiwiSaver system. If you are under the age of 16, you require the approval of your legal guardians. You can’t enrol yourself.
How can you join KiwiSaver?
Below are four different ways you can join KiwiSaver.
Potential workers are automatically registered in KiwiSaver by their employer and have 8 weeks to opt out. Some workers can opt to access KiwiSaver via their employer or by signing up with a KiwiSaver provider.
Individuals who are self-employed or who are not working may join KiwiSaver by signing up directly with the provider. Children can join in, too. Legal guardians may register their children directly with a KiwiSaver provider.
How much do I need to contribute?
Members who are employees are expected to make a fixed payment rate of 3% or at a rate of 4 %, 6%, 8% or 10% of their income. After you have been a member of KiwiSaver for 12 months, you have the option of applying for a Savings Suspension. If you are on a Savings Suspension, you no longer have the right to a guaranteed workplace contribution.
How do You Keep Track of Your Contributions?
There are two ways you can keep track of your contributions:
- Employer and government contributions
- Your contributions
Employer and government contributions
When you work and contribute to KiwiSaver, your employer will pay at least 3% of your pre-tax income or wages. When you are 18 years of age or older, for every dollar you contribute, the government contributes $0.50, to a limit of $521.43 a year.
Your contributions
If you work, you can opt to pay 3 per cent, 4 percent, 6 percent, 8 per cent or 10 percent of your pre-tax income or salaries. If you do not choose a payment rate, the default limit is 3%. Money will instantly be deducted from your pre-tax income or earnings into your KiwiSaver account.
If you are self-employed or not working, you can contribute directly. You can make direct deposits through direct debit, online banking, cheque or through Inland Revenue.
You can still make voluntary contributions at any time.
How will I test my KiwiSaver Performance?
Sign in to the online dashboard and press the Performance tab to see the historic results of your KiwiSaver account.
To monitor the results of your KiwiSaver Fund account, sign in to your portfolio.
Results can be viewed in the upper right corner of the consumer portal.
You can display the past results graph through the Performance tab.
The graph illustrates how investments are being monitored and can be modified over various time spans.
All performance figures given are based on fees and taxes.
What are my KiwiSaver options if I am self-employed or not employed?
Whether you are a self-employed or unemployed member of KiwiSaver, you will be liable for a Government contribution of $521 a year. (Note that the allocation of Government Contributions is laid down in law which may be extended or revoked at any time).
How do I withdraw from my KiwiSaver account?
You are eligible to withdraw from your account when you meet the New Zealand Superannuation minimum age, which is 65 or 5 years after you join KiwiSaver. If you have joined on or around 1 July 2019, you will be entitled to leave at the age of 65.
If you are buying a house, you might be able to withdraw any of your KiwiSaver savings. If you own a place, you will be able to withdraw your money on certain terms.
What happens to my KiwiSaver after I die?
The KiwiSaver Inland Revenue website claims that when you die, your KiwiSaver investments will be paid to your estate.
How easy it is for your loved ones to have access to your savings will depend on how much you have in your KiwiSaver wallet. If the balance is less than a specified amount (currently $15,000) when you die, your next of kin won’t have to wait for ‘probate’ and can apply straight to the KiwiSaver company to access the funds.
Probate is a declaration from the court that the relatives or the executors of the estate have the right to negotiate with and divide your properties in compliance with your will. If you don’t have a will before you pass away, the court will send administrative letters which operate the same way as the probate.
But if the KiwiSaver balance is over $15,000, the family will have to wait. So if there is a disagreement over who gets anything, the entire process may not be clear. However, whatever the value of your account, the KiwiSaver Inland Revenue website gives some useful advice:
Make sure you tell the next of kin who the scheme provider is. They would need to contact the issuer of the system to review the paperwork needed to finalize and pay out the funds accrued in the account.
So how can I opt out of KiwiSaver?
You can opt out if you are a new employee who has been automatically registered. As a new employee, you have at most eight weeks to opt out of the KiwiSaver plan.
Who can opt out of KiwiSaver?
When you’ve opted to join KiwiSaver voluntarily, you can’t get out – but you will be able to apply for suspension of savings.
When you have been automatically registered, you may opt out.
If you are under the age of 19, you will be eligible to opt out.
To opt out, you will be required to complete a new workplace opt-out approval form (KS10) and send it to your employer or Inland Revenue.
What are the rules for KiwiSaver withdrawals?
The rules for withdrawals from your account are laid out in the KiwiSaver Act. The KiwiSaver Act points out whether you are entitled to use the funds in your account. Below are certain general rules and regulations for withdrawals:
You are eligible to withdraw from your account when you meet the New Zealand Superannuation minimum age (currently 65) or five years after you join KiwiSaver if you enroll before 1 July 2019. If you joined on or after 1 July 2019, you will be eligible to withdraw at the age of 65.
If you die before you close your KiwiSaver account, your money will be transferred to your family.
Unless your main place of residence was outside New Zealand when you were a member of KiwiSaver, there might be certain State Contributions expected to be paid back to the Government.
The KiwiSaver company is required by law to check the identity before any transactions can be made.
If you are willing to withdraw and continue to operate, your payments will continue to be withdrawn from your pay. If you want to limit your tax cuts, you can file for a Savings Suspension.
If you have closed your KiwiSaver account, it cannot be reopened. You will have to open a new account.
How does Paying Taxes on KiwiSaver Work?
The returns on your KiwiSaver investment is subject to tax, which is paid to Inland Revenue on your behalf after it has been deducted by your provider.
The level of tax you pay depends on whether your plan is a property investment entity (PIE) and, if not, what the prescribed investor rate (PIR) is.
Are you missing Contributions?
KiwiSaver does not operate like a bank. Your deposits will not appear in your account the following day, and they do not necessarily come as a single deposit.
This can take a month from the moment your company deducts contributions to be reflected on your account. Delays or irregular sums of payment can occur if your employer files late or makes a mistake when they file.
How long does a KiwiSaver retirement withdrawal take?
Complete KiwiSaver withdrawals may take between 10 and 15 working days to be processed from the time we receive your submission. The method takes longer than you will anticipate, because the annual Government contribution has to be deducted from Inland Revenue.
Partial KiwiSaver tax withdrawals which do not require a government contribution application will take between 5 and 10 working days to be processed.
Make sure you give a notice of at least 15 working days for your retirement withdrawal.
What’s going to happen to my KiwiSaver savings if I quit working?
Your KiwiSaver membership is flexible, which ensures anytime you change your jobs, you will continue to belong to KiwiSaver.
When you stop receiving a wage or bonus, your workplace donations to KiwiSaver will be halted.
You can make a voluntary contribution to the KiwiSaver scheme. In order to obtain a maximum gross contribution of $521.24 from the Government, you will need to pay $1042.86 yearly between 1 July and 30 June (subject to eligibility).
When you resume work again, automatic wages deductions will continue again.
What is First-home withdrawal?
You may qualify for a first-home withdrawal, which will let you use your KiwiSaver savings to buy either land to build your first home or an already built home.
Can I get a first-home withdrawal?
You must satisfy the following criteria in order to make a first-home withdrawal. You’ve to:
- Have been a member of one or more KiwiSaver programs for at least 3 years – it will be at least 3 years since the first donation has been made to Inland Revenue.
- Never before have you owned a house or property, either in New Zealand or abroad, except in certain situations.
- Expected to live in the house
- Be in New Zealand.
How much can I withdraw?
If you’re eligible for first-home withdrawal, you can take out your:
- Employee contributions
- Employer contributions
- Voluntary contributions
- Investment earnings
- Government contributions, if you have any.
You won’t be able to withdraw all your KiwiSaver money – you must leave at least $1,000 in your account.
What Fees Do I Pay On My Kiwisaver Account?
There are two types of KiwiSaver account fees.
Account fees
This is a specified, flat existing members fee paid to your KiwiSaver provider for the general administration of your account. Payment fees vary from $0 to $60 a year.
Percentage fees
The KiwiSaver company pays a proportion of the value of your balance to fund a variety of programs relevant to your savings. Such payments cover the benefits of running the account such as unit pricing accounting and auditing.
Percentage costs are incurred on a regular basis and are reflected in the unit price of the funds — in other words, the valuation of the assets. These change based on the investment you are in, but the average for KiwiSaver plans is 1.22%, according to the CFFC.
What Do These Fees Pay For, Exactly?
KiwiSaver payments cover administration expenses such as paying fund consultants for their experience and making decisions to invest and raise the capital, benefits you enjoy as a customer, and operating costs. It makes sense, then, that you pay higher rates for better value to your account.
For example, if you choose a more professionally managed company, you will have a team of financial experts who deliberately pick and continuously track the businesses and investments they invest in. They’re looking for fresh ideas to help get you the highest possible investment.
How do I track my overall KiwiSaver balance?
The KiwiSaver platform gives a clear idea of the transactional side of your balance, such as being capable of seeing when the Inland Revenue Department (IRD) has transferred money to your KiwiSaver provider. But how do you get a clear image of your KiwiSaver balance?
The way you view this information can vary based on who your KiwiSaver provider is. For example, if your KiwiSaver provider is the same as your daily banking provider, you ought to be able to access your KiwiSaver balance by logging in to your online banking account.
How to find out your KiwiSaver provider
The first thing to know in KiwiSaver is which provider you’re with. There are a range of private KiwiSaver firms, including major banks or smaller niche businesses, which run the schemes.
Not certain who yours is? Contact Inland Revenue, and if you are a member, your information will be on record. Dial 0800 KIWISAVER or sign in to My KiwiSaver to find out about your provider.
How can I contact my adviser?
Scroll to the end of the screen, click on more.
Click on the Contact us bar.
On the Contact us screen, you’ll find your financial adviser details, if you have one. You will see his or her name.
Can I suspend my Savings?
Changes in your life could mean you need to pause participation for a while. KiwiSaver allows you to hold a savings suspension for at least three months and up to one year. You are expected, however, to remain a member of KiwiSaver for at least 12 months.
If you joined KiwiSaver before 1 July 2019 and you were 60 years of age or older, provided you continue to contribute and did not choose to retire, your employer will continue to contribute until you have completed five years of membership.
FAQs
Why should I sign up to a KiwiSaver Plan?
KiwiSaver is a long-term investment scheme. It helps to increase your financial freedom after you age. A gross State Contribution is $521.43 p.a. If you’re over 18 years old and make contributions of $1,042,86 or more per year, joining KiwiSaver is a perfect way to secure your future.
Is it important to check my KiwiSaver every day?
In the age of information, you are likely to find yourself wanting to check your balance frequently. But, doing so could make you think more and possibly lead to poor decisions. Investing is a long-term strategy, and short-term improvements to your KiwiSaver balance are common.
How much tax do you pay on KiwiSaver?
As a general rule, if you have: an annual salary of more than $48,000, you must pay tax on KiwiSaver at a rate of 28 per cent. Annual profits between $14,000 and $48,000 would be charged to KiwiSaver at a cost of 17.5 per cent. A taxable salary of $14,000 or less you pay a 10.5 per cent tax on KiwiSaver.
How do I increase my KiwiSaver?
You could increase the contribution limits once every 3 months unless your employer commits to a shorter period of time. You should contact your employer in order to do so. When you want to pay more than the normal cost, you will make the payment directly to your provider.
Is KiwiSaver calculated before or after tax?
Your contributions to KiwiSaver are based on your pre-tax income. However, you must pay the entire amount of tax you receive. For example, if you received $100 and withheld 8 per cent ($8) of your contributions to KiwiSaver, you will still pay $100 in full.
Can you manage your own KiwiSaver?
A number of New Zealanders have opted to handle their own investments in KiwiSaver. … This offers you an option to invest in funds or shares or a combination of both. DIY retirement investment is not new to New Zealand.
How do I close my KiwiSaver account?
If you have been automatically enrolled but do not wish to be a part of KiwiSaver, you could opt out. You can opt out by the end of week 2 and week 8. This is after day 14 and on or before day 56.
Can I use KiwiSaver to pay off student loans?
KiwiSaver is locked up at the age of 65 except in situations of extreme poverty, home ownership, permanent emigration and significant illness or death. You can’t withdraw your KiwiSaver in order to repay your student loan.
Can I have multiple KiwiSaver accounts?
Having multiple KiwiSaver accounts means that you will have to pay multiple fixed administration fees for the various schemes. This may not be an affordable option for most people. The beauty of KiwiSaver is that there is usually a single account per individual and this allows for an effective and efficient superannuation system.
How safe is KiwiSaver?
Many people wrongly assume that KiwiSaver is guaranteed by the New Zealand government. Unfortunately, this is an incorrect assumption. While it is true that KiwiSaver is set up by government legislation, and regulated by the NZ Inland Revenue, KiwiSaver funds are managed entirely by private providers such as banks and investment companies. This means that there is always an element of risk, but not as much as you would get running your investment by yourself.
