Kiwisaver

The KiwiSaver scheme is a retirement savings initiative established by the government, encouraging New Zealanders to save more and to think ahead to their retirement years. If you're confused about the KiwiSaver New Zealand superannuation scheme, take a look at these FAQ's:

How does KiwiSaver work?
KiwiSaver will assist you with regular saving over the long-term. Your contribution will come directly from your weekly, fortnightly or monthly salary or wages. The amount you save from each paycheck will be 4% of your pay (or 8% if you want to boost your rate of saving). From 1 April 2008, your contribution will be matched by your employer, starting at a minimum of 1% and increasing by 1% each year to reach 4% by 1 April 2011.

What do I get when I sign up to the KiwiSaver scheme?
When you sign up, you'll receive:

• A $1,000 contribution (tax free) from the government
• Up to $1,040 every year as a tax credit (paid directly into your KiwiSaver account)

How is my KiwiSaver contribution calculated?
Your savings contribution will be 4% of the salary or wages you receive before tax. That means 4% of your total salary, including any bonuses, sales commissions, overtime pay or extra remuneration you receive.

Do I have to earn a certain amount to be eligible for KiwiSaver?
No, there are no minimum or maximum income thresholds; all employees are eligible.

Why do some people contribute 4% and others 8% of their income?
It's simply a matter of choice. If you want to switch from 4% to 8%, or from 8% to 4%, you can do so, although you are only allowed to make this change once every quarter (unless otherwise arranged with your employer).

Can my employer's contribution be part of the 4% deducted from my pay?
Yes, if particular criteria are met, the amount your employer contributes can count towards the 4% you contribute. Alternatively, it can be on top of the 4% you pay into the KiwiSaver scheme

What happens if I leave my job or change jobs?
Your contributions will only continue to be deducted from your pay while you're an employee. If you leave your job, your payments will not continue unless you've made arrangements to do so. If you change jobs, KiwiSaver will go with you.

Can I sign up to the KiwiSaver scheme if I'm self-employed?
Yes, you can still save with KiwiSaver. Instead of making an arrangement through your employer, you'll deal directly with your scheme provider, arranging how much and how often you will make payments. You can make payments either to your scheme provider or through Inland Revenue. Note: until October 2007 all contributions must be made to Inland Revenue.

What happens if I have more than one job?
When you join KiwiSaver, you can select the job or jobs from which you want to make contributions.

Can I take a break from making contributions to KiwiSaver?
You can take a contributions holiday once you have been contributing for 12 months. This break can last anywhere from three months to five years. There are no limits on the number of contribution holidays you can take and you can still make lump payments during this time. If you're struggling financially during the first 12 months of saving, you can apply to Inland Revenue for an early contributions holiday.

Will my payments continue when I take sick leave?
If you take sick leave, your payments will continue unless you apply for a contributions holiday.

Will my payments continue if I go overseas?
If you travel overseas, your payments will continue as long as you are being paid by a New Zealand employer.

Can I make lump payments?
Yes, you can make payments at any time. To do this, choose the Pay Tax option on your Internet banking site, pay at any Westpac branch, or send a cheque to the government administrator of the KiwiBank scheme. Remember, though, any lump payments you make will be held until you reach the age of retirement.

Do I have to take part in the KiwiSaver scheme?
No, KiwiSaver is a voluntary saving plan to help you with long-term saving for retirement.

What will I get when I retire?
In addition to NZ Super (which provides enough for a basic standard of living during your retirement), KiwiSaver will ensure you live a comfortable life even when you are no longer working. KiwiSaver complements the payments you'll receive from the NZ Super fund.

How much will I need to live on when I retire?
This will depend on your individual circumstances. In general terms, you'll need to allow for enough to sustain your current standard of living, as well as extra financial security for medical bills, family needs and other unexpected costs. There are a number of useful New Zealand retirement saving tools online, which allow you to calculate how much you will need to save for your retirement.

When does KiwiSaver kick into action?
From 1 July 2007, you'll be able to sign up to the KiwiSaver plan if you're a New Zealand citzen or are entitled to live here indefinitely. You must be below the age of 65, the age at which you'll be eligible for NZ Super payouts.

Do I have to tell my employer that I want to sign up for KiwiSaver?
If you're over the age of 18 and enter a new job on or after 1 July 2007, you'll automatically be enrolled in the KiwiSaver scheme. You can opt out of this saving plan if it isn't right for you.

Looking for more information? Find New Zealand superannuation information in the NZS.com directory.

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