KiwiSaver is an investment scheme that can help you save for retirement and can also be used to help you buy your first home. Your KiwiSaver balance is made up of contributions from your salary, from your employer and from the government (provided you contribute yourself).
Joining KiwiSaver is popular – but what are the main reasons to sign up?
Your employer and the government give you money
Employers are required to match your contributions (to a 3% cap) and the Government will give you up to $521 per year provided you make a minimum contribution of $1,042. So if you are an employee and over 18 years old, you are likely to qualify for the free money by investing in your KiwiSaver.
It can help you get into your own home
You’ll earn money on your contributions
Your retirement will be more comfortable
Any New Zealand Citizen or Permanent Resident can join KiwiSaver.
You cannot join KiwiSaver if you have a temporary, visitor, work or student visa.
There are different ways to join KiwiSaver. Depending on your situation you can enrol directly with a scheme provider. If you’re under 18, there are different rules.
Joining KiwiSaver if you’re under 18 years of age
If you’re under 18 years of age you can only join KiwiSaver through a scheme provider. You cannot join through your employer.
If you’re between 16 and 17 years of age, you need at least one legal guardian to co-sign your application. If you don’t have a legal guardian, contact your chosen KiwiSaver scheme provider.
If you’re under 16, you need the consent of all your legal guardians. You cannot enrol yourself.
However, you need to be between the ages of 18-65 to receive government contributions (up to a maximum of $521 per year).
53% of Kiwis are in the wrong KiwiSaver fund, being in the wrong fund can result in your KiwiSaver balance being up to 30% lower at your retirement than if you had an appropriate set of funds. That's hundreds of thousands of dollars you are putting at risk.
Being in a fund which is too conservative (predominantly cash or income assets) will mean that you are at risk of not meeting your objective as the returns will be lower. Being in a fund which is too risky means that you might be exposed to a market downturn at a time when you need to access your capital.
Kōura offers you free advice to make sure you always know what portfolio of funds is best for you. We are a digital adviser that’s able to understand your KiwiSaver investment objectives and risk appetite and tailor a profile that’s entirely personalised to you. For more details on this, see here.
You can stop contributing to your KiwiSaver after you have signed up to KiwiSaver by way of a Savings Suspension. There are however some conditions:
- If you have been a KiwiSaver member for more than 12 months you can have a Savings Suspension for between 3 and 12 months by sending a form to IRD. You can restart your contributions at any point in time and you can extend the Suspension if you need to
- If you have been a KiwiSaver member for less than 12 months, you will need to apply for an early Savings Suspension. This will only be granted in the event of Financial Hardship.
You can apply for a savings suspension directly to the IRD by completing the Savings Suspension Request Form (KS6) or applying directly on the IRD My KiwiSaver portal.
You need to remember that if you stop contributing to your KiwiSaver, your employer's compulsory contributions and the Government Contributions will also stop. A small break in contributions to your KiwiSaver can make a significant difference in the money available to you at retirement.
After 12 months of contributing to your KiwiSaver account, you can have a Savings Suspension. You will not need to contribute to your KiwiSaver plan while you are on the Saving Suspension and you will not receive Government or Employer contributions either.
Your Savings Suspension can last anywhere between 3 and 12 months and you can renew it as often as you want. If you want to restart your contributions, you can do so at any point in time.
To find out more about saving suspensions, you can visit the specific page on the KiwiSaver website.
Many of us were opted in automatically at first and never looked into it. If this is you, good news: you may have more in your account than you realised!
However, you may not be making the most of your KiwiSaver plan. Perhaps you might not be getting the maximum amount of Government money you could be getting yearly, or you may be in the wrong Prescribed Investor Rate, or you may be in a KiwiSaver fund that's entirely wrong for your situation. Basically, you may be losing out on your retirement!
It definitely pays to check. Look for any letters or documentation telling you where your KiwiSaver account is. If you’re not sure who your provider is, you can find out by signing up to myIR Secure Online Services, or by calling Inland Revenue.
Or you can just switch to Kōura and you always will know what fund you are in. You even don't need to contact your current provider.
The answer depends on what you want out of your KiwiSaver plan and what you can afford to contribute. Small changes in contributions today can make a big difference to your final balance.
How much you contribute depends on your own personal circumstances and objectives. You can contribute 3%, 4%, 6%, 8% or 10% of your salary. Your employer’s contribution is likely to be capped at 3%.
In deciding what you should contribute, you need to strike a balance between what can you afford to contribute and what you want to achieve with your KiwiSaver plan (the income you want in retirement or the size of your first home deposit).
In general, the more you contribute, the more that you will have at the time of retirement or buying your first home. A 35 year old earning $80,000 a year contributing 3% of their income can expect around $640,000 at retirement, which will provide an income of $618 per week (including NZ Super). By contributing 6%, that same person can expect $968,000, providing an income of $771 per week. An extra $46 per week in contributions today (the difference between a 3% and 6% contribution rate) will lead to an expected extra $153 per week in retirement.
See our blog here to get more detail on how much you should contribute to your KiwiSaver account.
You can easily change the amount you put into your KiwiSaver account, but only once every three months. Just let your employer know by completing the IRD KiwiSaver deduction form.
The New Zealand Government will match your contribution 50c in every dollar up to a maximum of $521 every year (so you need to contribute $1,041 to maximise the Government Contribution). The Contribution is calculated on an annual basis from 1 July of one year through to 30 June of the next year, each year. To maximise the Contribution, you need to contribute $1,042 before 30 June each year.
If you are living offshore you do not qualify for the Government Contribution. If you have lived in New Zealand for a part of the year, then the amount will be pro-rated for the portion of the year that you spent in New Zealand.
The Government will contribute up to $521.43 per year to your KiwiSaver account. To reach this amount, you need to contribute $1,042.86.
You are eligible for a Government Contribution of up to $521.43 a year.
For every $1 you put in (via Employee or Voluntary contributions), the Government gives you another 50 cents, up to a maximum of $521.43 a year. To maximise the Government Contribution, you'll need to put in at least $1,042.86 a year (July 1 of one year to June 30 of the next year).
To receive the Government Contribution you must be between the ages of 18 and 65. You also need to be living in New Zealand, unless you’re a Government employee, working as a volunteer for a charitable organisation or your job meets one or more of the requirements of the Student Loan Scheme Act 2011.
If you do not contribute via your employer, we recommend that you set up a weekly ($20) or monthly ($90) direct debit. You will hardly notice the contributions and it will be the best returning investment you will ever make!
We will let you know when you have made sufficient contributions
We will send you an email and tell you if you have received the maximum Government Contribution (generally referred to as Member Tax Credit).
If you have not yet received your Member Tax Credit, you can check your own contributions via the Kōura portal or alternatively you can login to the My IR section on the IRD website. Sometimes there is a delay in Kōura receiving contributions. The IRD website is likely to be more up to date and show your correct contributions.
If you have transferred to Kōura part-way through the year, you will need to check with the IRD as Kōura will not have a full record of your contributions.
You can check by calling the IRD or using the My IR section on the IRD website.
If you’re a first-time buyer and you’ve been making regular KiwiSaver contributions for at least 3 years, you may be able to apply for a First Home Grant (previously KiwiSaver HomeStart Grant) through Kāinga Ora.
How it works
If you buy an existing home, you can get $1,000 for each year you’ve paid into the scheme. The most you can get is $5,000 for 5 years.
If you buy a new home or land, you can get $2,000 for each year you’ve paid into the scheme. The most you can get is $10,000 for 5 years.
Who can apply
To apply, you must:
- be 18 or older
- have been contributing at least the minimum amount of your income (currently 3%) to your KiwiSaver scheme for 3 years
- have had an income in the previous 12 months (before tax) of less than:
- $85,000 for 1 person
- $130,000 for 2 or more people
- have a deposit of at least 5% of the purchase price
- agree to live in your property for at least 6 months:
- from the date you buy your home (the settlement date), or
- if the house is new when the Code of Compliance Certificate is issued.
Your KiwiSaver money will be paid to your estate. If you want particular persons to receive your KiwiSaver savings, you should designate those persons as beneficiaries in your will (and make a will if you haven’t already!). You should also let them know who your KiwiSaver provider is as they will need to contact them to discuss the documentation required to release the funds in your account.
Note: If your account balance is less than $15,000, your provider can make the payment to an authorised person (for example a surviving spouse or partner) without requiring probate or letters of administration.
Yes you can. Currently the process to transfer funds requires you to initiate the process. Unfortunately we cannot do this on your behalf. If you have money invested in an Australian Superannuation fund, you will need to initiate the transfer process on your own by requesting the required documentation from them.
The steps are laid out here on the Australian Tax Office website. But these are the highlights.
- You need to have permanently emigrated to New Zealand – you need to sign a statutory declaration stating this is the case, and provide proof of residence at an address in New Zealand
- Contact your Australian super fund and request the whole balance of your super savings be transferred to a KiwiSaver scheme
- Have a KiwiSaver scheme ready to receive the transferred funds and ensured the KiwiSaver scheme is going to accept your Australian transfer (of which Kōura is one)