How KiwiSaver works

From 1 July 2007, if you start a new job and are aged 18 to 65, you’ll automatically be enrolled into KiwiSaver (with some exceptions).  Your employer will start making KiwiSaver deductions from your first pay and these will continue unless you decide to opt out. The opt out period for KiwiSaver is any time from the end of week two through to the end of week eight after starting your new job.

From 1 April 2008, your employer must start to match your contributions to KiwiSaver. This is being phased in gradually, starting with a minimum of 1% of your gross salary on 1 April 2008, and increasing by 1% per year to 4% on 1 April 2011. As part of your employment package, however, your employer may offer to contribute more than the minimum specified to your KiwiSaver account.

If you’re already in a job, you can join KiwiSaver by contacting a KiwiSaver provider of your choice and telling them you’d like to opt in.

The Government provides a one-off kick-start by contributing $1,000 to your KiwiSaver account once you are enrolled. The Government will match your contributions to KiwiSaver through an annual tax credit to your KiwiSaver account of up to $20 per week (approximately $1,040 per annum).  They will also make a yearly contribution of $40 towards the fees charged by scheme providers. (Conditions apply).

Once you’re enrolled, an amount equal to 4% of your gross salary or wages (including bonuses, commission and overtime) will be deducted from each after-tax pay, unless you choose to contribute at the higher rate of 8%.  Your savings will then be locked in until you reach the age of eligibility for New Zealand Superannuation (currently 65) or five years after the first contribution, whichever is later.  However, there are some exceptions for significant financial hardship, serious illness, death, or permanent emigration.  (Terms and conditions apply).  Once you have been making contributions for a year, you can also choose to take a ‘contributions holiday’, where you stop making contributions for a while. This might be useful if you are planning to do an OE or leave the workforce for a time, for example, to start a family.

Another feature of KiwiSaver is a one-time withdrawal facility to assist with the purchase of a first home.  A first home deposit subsidy of $1,000 for each year of contributions to a scheme, up to a maximum of $5,000, is also available to KiwiSaver members. KiwiSaver members must have been saving for at least three years and must meet certain criteria to be eligible for the one-time withdrawal or the subsidy. (Please Contact Us for more details).

As part of the enrolment process, you will receive an initial Investment Statement. Then, once you are a member, your KiwiSaver provider will send you annual updates on the progress of your investment.

Please Contact Us for more information on how KiwiSaver works.

The information on this web page is a summary of KiwiSaver only and is believed to be accurate at the time of release (June 2007).  Please refer to www.kiwisaver.govt.nz