August 31, 2020
KiwiSaver is a voluntary savings scheme set up by the Government and aimed at assisting NZ citizens, and those entitled to live in NZ indefinitely, save for their retirement. Access to funds saved for retirement aligns with the age that the eligible person can receive NZ superannuation; currently 65 years old.
Signing up to KiwiSaver
There are three ways to join KiwiSaver:
- When you start a new job, if you are not already a member and are eligible, your employer will automatically enroll you;
- You can contact a KiwiSaver provider directly and join; or
- You can join through your existing employer by asking them for an employee information pack and filling in the application form.
Note: if you have been automatically enrolled when starting a new job and do not wish to join KiwiSaver you must complete an opt-out request form between the second and eighth week of starting your new job.
Contributions to your KiwiSaver
Depending on your circumstances, contributions to your KiwiSaver scheme come from yourself, your employer and the Government.
For employees, if you choose to join KiwiSaver your savings contributions are deducted from your gross pay at the rate of either 3%, 4%, 6%, 8% or 10% (you choose the rate) and are invested for you in a KiwiSaver scheme of your choice. Your employer is also required to contribute an amount that equates to 3% of your gross pay to your KiwiSaver scheme. Finally, the Government makes a contribution up to $521.43 per annum.
If you are self-employed or not working and wish to join KiwiSaver, you simply agree with your KiwiSaver provider how much you want to contribute and make payments directly to the provider. Note to be eligible for the annual Government contribution you will need to contribute at least $1,042.86 between 1 July and 30 June each year.
KiwiSaver members can apply to Inland Revenue for a savings suspension (formerly referred to as a “contributions holiday”) after they have been in KiwiSaver for 12 months. Each savings suspension is for a period of 3 months to 1 year. There is no limit to the number of savings suspensions a member can apply for.
KiwiSaver is designed to be a long term investment to help with saving for retirement however there are limited circumstances under which you may be able to withdraw funds. They are:
- To help buy your first home;
- If you are moving permanently to another country;
- If you are experiencing significant financial hardship;
- If you have serious illness;
- If you have a life-shortening congenital condition
For more information regarding KiwiSaver withdrawals or KiwiSaver in general please call us or alternatively refer to the KiwiSaver website http://www.kiwisaver.govt.nz/.
Please note that we are unable to provide financial advice or help choose which KiwiSaver scheme to belong to – if you would like this advice we suggest you either speak to an investment advisor or the website https://sorted.org.nz/.
- Give new employees and other existing staff who are interested an Employee information pack (KS3);
- Pass employees' details to Inland Revenue to enable them to be enrolled; and
- Deduct contributions from employees' gross salary and pay these to IRD through the PAYE system
Further information specific to employers can be found on the IRD website at http://www.ird.govt.nz/kiwisaver/employers/how/role-of-employers/.
Author: Kirsty Bullen
Campbell Tyson Limited