What is KiwiSaver?
Most Kiwis believe it's important to save money for their long-term future. But, as many of us know, saving is often easier said than done.
KiwiSaver is a work-based savings scheme which is voluntary to join, but compulsory for employers to facilitate. The government created the framework for the KiwiSaver initiative to help New Zealanders financially prepare for retirement, with the management of KiwiSaver investments being supplied by professional managers.
It's an easy way to save, with your choice of contributions being deducted directly from your gross salary or wages at a rate of either 2%, 4% or 8%.
If you have been automatically enrolled in KiwiSaver you have eight weeks from starting your new job to decide if you want to remain a member of KiwiSaver or opt out.
From 1 April 2009, you will also be entitled to a matching employer contribution of 2%.
As you are preparing for your retirement, your savings are generally "locked in." You can access your savings when you qualify for New Zealand Superannuation (currently 65) or after five years membership, whichever is later. You may be able to withdraw your money earlier in certain circumstances.
If you are an existing employee, self-employed, not working, a student, a child in other circumstances, and you are eligible, you can join KiwiSaver by opting in.
Starting KiwiSaver as early as you can could make a big difference to your quality of life later on. Joining KiwiSaver is easy, whether through automatic enrolment when starting a new job, or by choosing to join.
Seven reasons to join KiwiSaver
You may be thinking "why should I join KiwiSaver?”
Whether you are already saving or you are about to start, the government will help you ave for your future by providing a number of benefits as a KiwiSaver member. It's designed to be hassle-free so it's easy to maintain a regular savings habit to provide the lifestyle that you desire in retirement.
Here are some of the key features and benefits:
- A $1,000 kick start contribution will be credited to your account when it is opened.
- The Government will help by matching your contributions with a tax credit of up to $20 per week ($1,042.86 per year).
- Minimum contribution of 2% if you are on PAYE or no minimums if you are self-employed, not working or a child.
- Compulsory Matching employer contributions of 2% of salary.
- You can receive employer contributions tax free, up to 2% of salary. The tax exemption can significantly boost savings over time.
- After contributing for 3 years, you could qualify for a first home withdrawal using both your own and your employer's contributions.
- You may be eligible for a first home deposit subsidy by HNZ of up to $1,000 for each year of contribution to a maximum of $5,000.
With the significant benefits that the government has put in place for KiwiSaver members, many New Zealanders will benefit from opting in.