What is KiwiSaver?
Most Kiwis believe it's important to save money for their long-term future. But, as many of us know, saving is often easier said than done.
KiwiSaver is a work-based savings scheme which is voluntary to join, but compulsory for employers to facilitate. The government created the framework for the KiwiSaver initiative to help New Zealanders financially prepare for retirement, with the management of KiwiSaver investments being supplied by professional managers.
It's an easy way to save, with your choice of contributions being deducted directly from your gross salary or wages at a rate of either 3%, 4% or 8%.
If you have been automatically enrolled in KiwiSaver you have eight weeks from starting your new job to decide if you want to remain a member of KiwiSaver or opt out.
From 1 April 2013, you will also be entitled to a matching employer contribution of 3%.
As you are preparing for your retirement, your savings are generally "locked in." You can access your savings when you qualify for New Zealand Superannuation (currently age 65) or after five years membership, whichever is later. You may be able to withdraw your money earlier in certain circumstances.
If you are an existing employee, self-employed, not working, a student, a child in other circumstances, and you are eligible, you can join KiwiSaver by opting in.
Starting KiwiSaver as early as you can could make a big difference to your quality of life later on. Joining KiwiSaver is easy, whether through automatic enrolment when starting a new job, or by choosing to join.
5 Reasons to Join
You may be thinking "Why should I join KiwiSaver?"
Whether you are already saving or you are about to start, the government will help you save for your future by providing a number of benefits as a KiwiSaver member. It's designed to be hassle-free so it's easy to maintain a regular savings habit to provide the lifestyle that you desire in retirement.
Here are some of the key features and benefits:
The government will help by matching your contributions with a tax credit of up to $10 per week (a maximum $521.43 per year from 1 July 2011 onwards, if you're eligible).
Minimum contribution of 3% if you are on PAYE or no minimums if you are self-employed, not working or a child.
Compulsory matching employer contributions of 3% of your pay, if you are eligible (note that exceptions apply).
After being a member for 3 years, you could qualify to withdraw some or all of your savings towards buying your first home. Effectively 1 April 2015 onwards your withdrawal may include: your "members" contributions, and employer contributions, any returns on investment(s) received, and any Member Tax Credits.
You must leave at least $1000 in your AMP KiwiSaver account after the withdrawal, even if you have not received a $1000 kick-start contribution.
In some situations if you have owned a home before, you may be able to make a withdrawal, if Housing New Zealand accepts that you are in the same financial position as would be expected if you have never owned a property in the past.
After 3 years of contributing to KiwiSaver, you may be eligible for a KiwiSaver HomeStart grant. The grants are administered by Housing New Zealand and will be paid to your solicitor. To find out more, visit the Housing New Zealand website or call them on 0508 935 266.
With the significant benefits that the government has put in place for KiwiSaver members, many New Zealanders will benefit from opting in.