KiwiSaver
What is KiwiSaver all about….
KiwiSaver is a government-sponsored framework for work-based retirement savings. The government doesn’t manage savings under KiwiSaver – rather, savings are managed by private sector scheme providers. KiwiSaver is voluntary to join, but compulsory for employers to facilitate. For more details click here
Key facts about KiwiSaver - Savers:
Employees are automatically enrolled when they begin a new job and have eight weeks in which to opt out.
Contributions will start from the first pay day.
Existing employees and individuals not employed (e.g. the self-employed or those not in the workforce) can opt into KiwiSaver.
Contributions are deducted from wages at a rate of at least 3% of gross salary and wages before tax. An option to contribute at 3%, 4%, 6%, 8% or 10% is also available. Use our KiwiSaver Account Calculator to work out your rate of contribution, and what you’ll have saved by age 65.
Members can choose their KiwiSaver account and investment risk profile.
Those who do not choose a scheme are randomly allocated to a default scheme provider.
Savers can select their own investment product and can change scheme providers, but can only have one provider at any time.
Enrollment is not automatic for workers under 18, or for existing employees, but they can join if they wish – as can other people, such as beneficiaries and the self-employed.
Savings are primarily for retirement and are locked in until the recipient reaches the age of eligibility for NZ Superannuation or for five years membership, whichever is the later. Early withdrawals are possible in cases of financial hardship, serious illness, permanent emigration or, after a minimum of three years, to contribute toward a deposit on a first home.
After 12 months of contributions to KiwiSaver, all individuals can stop contributions for up to five years at a time.
If you wish to apply for the first home withdrawal benefit, you must leave at least $1,000 in your KiwiSaver Scheme account after the withdrawal, even if you have not received a $1,000 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.
A home deposit subsidy will be available to qualifying first home buyers who are saving through KiwiSaver. Eligibility will be subject an income cap and a regional house price cap.
The Government will pay 50 cents for every dollar of member contributions up to a maximum payment of $521.43, credited directly to their KiwiSaver account. These payments are made annually after 30 June of each year.
The minimum rate for Employers contribution is 3% of the Employees gross salary or wages.
Employers:
Enroll new employees in KiwiSaver and existing employees who choose to opt in
Deduct employees’ contributions and forward them to the IRD along with PAYE, along with any matching contributions
Aim is to minimise compliance costs where possible
The automatic enrollment provisions will not apply in workplaces where the employer is already running an approved work-based scheme that is portable, open to all new permanent (including part-time) employees, the minimum employee contribution combined with the maximum employer contribution is at least 3% and contributions are locked in until retirement age.
Employees whose employer is exempt from the automatic enrollment provisions will still be able to join KiwiSaver (by opting-in)
If an employer is merely acting as a conduit or passing on information about KiwiSaver to its employees, or selecting a preferred KiwiSaver scheme for its employees, the employer will not be liable as an investment adviser or promoter under the investment advisers and securities legislation
If you would like to learn more about KiwiSaver, please Contact us today.