Kiwisaver FAQ

 

Kiwisaver for Employees Employees
Kiwisaver for Employers Employers
Kiwisaver for Kids Kiwisaver for Kids

Kiwisaver for Non-PAYE Earners Or Not Employed 

 Kiwisaver for Non-PAYE Earners
Kiwisaver  Self Employed Self Employed

For Employees

KiwiSaver is a voluntary, work-based savings scheme for New Zealand residents aged up to 65, aimed at helping provide for their long-term retirement saving.
 
Anyone over 18 years old starting a new job from 1 July 2007 is automatically enrolled. Existing employees can enrol in KiwiSaver at any time.
 
One of the great things about KiwiSaver is that individuals can select their own KiwiSaver scheme however they can only have one KiwiSaver scheme at any time.
 
Everyone enrolling in KiwiSaver will have a $1,000 kickstart credited to their KiwiSaver account by the Government. This is paid three months after joining KiwiSaver.
 
How much do I pay?

Amounts credited to your KiwiSaver account will come from three sources: your contributions, your employer’s contributions and the Government.
 
Until 31 March 2009, employees can choose to contribute an amount equal to either 4% or 8% of their gross income.  Effective 1 April 2009 the minimum employee contribution rate will reduce to an amount equal to 2% of gross income.  This is deducted by your employer through the PAYE system from your take home pay (after tax).
 
Your contributions will be matched by government tax credit contributions of up to $20 per week ($1,042.86 per year) while you are aged 18 or over, below the KiwiSaver end payment date (the later of attaining age 65 and completing 5 years membership) and are principally New Zealand resident. Until 31 March 2009, you will also receive a fee subsidy of $40 every year; paid twice yearly in $20 amounts - this will no longer be offered from 1 April 2009.
 
From 1 April 2008 all employees contributing to KiwiSaver are also entitled to a tax free (no tax is deducted) matching employer contribution as follows: 
 

From Monthly employee contribution
(% of gross salary)		 Employer contribution
(% of gross salary)		 Total employee and
employer contributions
(% of gross salary)
1 April 2008
4
1
5
1 April 2009 2 2 4

 
Your employer can contribute more than the minimum, however, it will be subject to the Employer Superannuation Contribution Tax (ECST).
 
The earliest date on which funds can be accessed is the age of eligibility for New Zealand Superannuation (currently 65), except in special circumstances.

So in summary by joining KiwiSaver you qualify for:
 

ü A $1,000 kickstart from the Government just for joining KiwiSaver
ü Matching contributions from the Government of up to $20 per week ($1,040 per year) if you are over 18
ü $40 per year for the Government towards scheme fees - abolished from 1 April 2009
ü Compulsory employer contributions (starting at starting at 1% from 1 April 2008 and increasing to 2% from 1 April 2009 if you are over 18)

IS KIWISAVER SUITABLE

If you can afford to save an amount equal to 4% of your gross income, KiwiSaver is a very attractive retirement savings scheme. The tax and savings benefits from your employer and the Government are only available by joining KiwiSaver.

If you have not purchased a first home the government subsidy of up to $5,000 may also be worthwhile (conditions will apply) and you can withdraw your KiwiSaver savings (except for the Government's $1,000 kick-start and the tax credit amount) to help make up your deposit.
 
KiwiSaver is portable – you can change providers if you are not happy or want a different risk profile - and the fees charged by scheme providers must not be unreasonable and have to be approved by the Government Actuary (part of the Ministry of Economic Development).
 
If you have high interest debt – credit cards, hire purchase, personal loans, etc you may wish to pay these high interest debts off before joining KiwiSaver. 

For Kids

Kids can join KiwiSaver too!

With no minimum age to join, the savings incentives attached to KiwiSaver NZ make it a great way to put aside money for your kids' future.  The funds will be locked in until age 65 but some amounts can be accessed earlier in certain circumstances, such as buying a first home.  

They'll need an IRD number before joining.  You can apply for one using an IR594 form, downloadable from the Inland Revenue website.

An early start works wonders

(and $1,000 for joining doesn't hurt either)

Everyone under 65 years of age – including children – is able to join KiwiSaver.  Enrolling your children in KiwiSaver qualifies them for:
  • $1,000 kickstart from the Government
  • $40 per annum fee subsidy (to be abolished 1 April 2009)
We do not require an initial contribution nor is there a minimum annual contribution.  Your child will need an IRD number and one form of ID to setup an account.  Click here to obtain an IRD number application form.
 
Your children will need to contribute to KiwiSaver when they begin paid employment (even if it is an after school job).  However, once they have been in KiwiSaver for over a year, they are entitled to take a contributions holiday.
 
You can make voluntary contributions to your children’s Kiwisaver accounts at any time.  If you do wish to set up a savings regime for your children you may want to consider alternatives outside of KiwiSaver as there is no restriction on accessing funds like there is with KiwiSaver.  Feel free to contact us for other investment options.
 
Enrolling your children in KiwiSaver is a great way to kickstart their investment future.  We take a proactive stance on educating members and your children will benefit from learning about saving and investing.

IS KIWISAVER SUITABLE

Getting your children into a savings regime from an early age is a great start for their financial future. Cranfield Insurance & Investments proactive stance on educating members also means they will continue to learn about saving and investing.
 
However, KiwiSaver does have restrictions on accessing funds. In additition, your children will need to contribute to KiwiSaver when they begin paid employment (even if it is an after school job), so you may want to consider alternatives outside of KiwiSaver.
 
Feel free to call us to discuss how our other investment  options may be able to help. 

Self Employed

The self employed are able to join KiwiSaver and they are eligible for:

  • the $1,000 kickstart from the Government
  • member tax credit contributions (MTC's) matching their own contributions in amounts of up to $20 per week ($1,040 per year), paid by the IRD direct into your Kiwisaver account
  • $40 per annum fee subsidy (to be abolished 1 April 2009)
  • participation in the first home subsidy (subject to conditions) and mortgage diversion option (if offered by KiwiSaver scheme and mortgage providers).
You must be aged 18 or over (and below the KiwiSaver end payment date, which is currently the later of age 65 and completion of 5 years’ membership) to be eligible to receive the tax credit contribution. You must also be principally New Zealand resident.
 
Self employed will deal directly with the scheme provider they choose – instead of going through the IRD.
 
Because the self-employed do not technically have an employer they are not eligible for the employer contribution or the tax break on the employer’s contribution.If you are an employee at one workplace (despite being self-employed at another) then you are an employee for the purposes of the KiwiSaver Act. Until 31 March 2009, you will be required to contribute to the Scheme an amount equal to either 4% or 8% of your gross salary or wages from the at employment.  From 1 April 2009, the minimum compulsory employee contribution will reduce to 2%.
 

Would I be better off KiwiSaver-wise if my business was a limited liability company?

If you were paid by a company the main changes would be:

  • the employers contribution of up to 4% would effectively be tax-free (from 1 April 2009 the tax-free limit drops to 2%)
  • your contributions would be passed through the IRD
You will need to discuss the financial and other implications of forming a company with your accountant or financial adviser.

Despite not receiving the “tax-break” on the employer’s contribution the self employed do receive all the other benefits of KiwiSaver including:

  • the $1,000 KiwiSaver kickstart
  • the tax credit contribution of up to $20 a week. You must be aged 18 or over (and below the KiwiSaver end payment date, which is the later of age 65 and the completion of 5 years membership to be eligible to receive the tax credit contribution). You must also be principally New Zealand resident.
  • the annual fee subsidy of $40 a year (to be abolished 1 April 2009)
  • the opportunity to receive the first home subsidy of up to $5,000 (subject to conditions)

IS KIWISAVER SUITABLE

If you have high-interest debt – credit cards, hire purchase, personal loans, etc you may wish to pay these high-interest debts off before joining KiwiSaver.

Not employed

Everyone under 65 years old (including children) is able to join KiwiSaver and make regular contributions – even if they are not employed.


Everyone:

  • will receive the $1,000 KiwiSaver kickstart from the Government
  • is entitled to the $40 per annum fee subsidy (to be abolished 1 April 2009)
  • is able to participate in the first home subsidy programme (subject to the conditions of the programme)
  • is entitled to a tax credit contribution to their KiwiSaver account matching their contributions up to $20 per week while aged 18 or over (and below the KiwiSaver end payment date, which is the later of New Zealand Superannuation age – currently 65 – and completing 5 years membership, and principally New Zealand resident.
Under the Grosvenor KiwiSaver Scheme if you are not receiving a wage or salary you are not required to make regular contributions. However if you do manage to save, your contribution will be matched by a tax credit contribution of up to $20 per week (if you meet the criteria outlined above) from the Government.

The Grosvenor KiwiSaver Scheme does not require a minimum annual contribution.
 
When you do start work you will need to advise your employer that you are a KiwiSaver member and you will be required to make regular contributions from your wages.

IS KIWISAVER SUITABLE FOR ME

If you do not have normal outgoings (you still live at home etc and are supported by family) and are able to save, KiwiSaver - because of the $1,000 kickstart, annual fee subsidy (to be abolished 1 April 2009), first home subsidy programme and up to $20 per week tax credit contribution (for those aged 18 and over) – is very attractive.

If you are on a benefit and have normal outgoings – rent, power, phones, etc you may find it difficult to afford to save.
 
If you have high-interest debt – hire purchase, credit cards, etc you may wish to pay this debt off before joining KiwiSaver.

For Employers

 

Employers have several obligations under the KiwiSaver Act.

Employers must:

  • Determine whether new employees are subject to automatic enrolment.
  • Provide information packs to new employees aged over 18 years within 7 days of starting work.
  • Send Inland Revenue new employee details, such as name, address and IRD number.
  • Deduct KiwiSaver contributions, starting from the new employee’s first pay. Contributions must be forwarded to Inland Revenue on a monthly basis.
  • Act on any opt out or opt in requests and any contribution holiday notices.
  • If they have selected a preferred KiwiSaver provider, give their employees:
An investment statement from that provider

A statement advising employees that, if they do not choose their own scheme, they will be allocated to their employer’s chosen KiwiSaver scheme
  • From 1 April 2008 make a contribution to all employees who are contributing to KiwiSaver (or a compliant company superannuation fund):