KiwiSaver is an opt-in initiative designed to help New Zealanders save for their retirement. Understanding how KiwiSaver works can help you make informed decisions about your financial future.

What is KiwiSaver?

KiwiSaver is a government-backed savings scheme that allows individuals to contribute a percentage of their income towards long-term savings. The funds are managed by approved KiwiSaver providers and invested in a range of products and companies to help grow your retirement savings over time.

KiwiSaver providers are heavily monitored and all KiwiSaver accounts are held in a trust. This means that if a provider closes their doors, KiwiSaver balances do not simply ‘disappear’, they are transferred to be looked after by another KiwiSaver Provider. KiwiSaver contributions are collected by IRD, KiwiSaver providers do not touch money directly.

How KiwiSaver Contributions Work

Employee Contributions: Employees can contribute 3%, 4%, 6%, 8%, or 10% of their salary or wages to their KiwiSaver account.
Employer Contributions: Employers are required to contribute at least 3% of an employee’s salary if the employee is enrolled in KiwiSaver.
Government Contributions: The government provides an annual contribution of up to $521.43 if you contribute at least $1,042.86 within a KiwiSaver year (July 1 – June 30).
Voluntary Contributions: Contributing to KiwiSaver is not restricted to the employed. You are able to make voluntary contribution at any value you are comfortable with. These can be one-off or regular. This is how parents are able to open KiwiSaver accounts for their children as well as contribute if you are self-employed.

Who Can Join KiwiSaver?

KiwiSaver is available to New Zealand citizens and residents under the age of 65. This includes children. As long as the individual as an IRD number, a KiwiSaver account can be created. What is important to remember is KiwiSaver is an opt-in scheme. You don’t have to have or create a KiwiSaver account, but once you opt-in it is difficult to opt-out.

KiwiSaver Investment Funds

KiwiSaver funds are managed by professional fund managers, and you can choose from different types of funds based on your risk tolerance and timeframe until you are wanting to withdrawal your KiwiSaver.
Below is a diagram created by Sorted.org.nz that demonstrates the differences in KiwiSaver funds.

Withdrawing Your KiwiSaver Savings

Your KiwiSaver savings can generally be accessed:

At age 65: When you reach the retirement age.
For a first home purchase: If you meet eligibility criteria, you can withdraw most of your KiwiSaver funds to buy your first home.
In cases of significant financial hardship or serious illness: Subject to approval.

Choosing the Right KiwiSaver Fund

Selecting the right KiwiSaver fund is crucial for maximizing your returns. Factors to consider include:

Your investment time frame
Your risk tolerance
Fund fees and performance

Final Thoughts

KiwiSaver is an excellent tool for building long-term financial security. Whether you’re just starting out or reviewing your current fund, making informed choices can help you achieve your financial goals.

At New Vision Financial Services, we can help you navigate KiwiSaver and choose the best options for your financial future. Contact us today to learn more!

Amy Callon
Financial Adviser
New Vision Financial Services

Plan your future and let us help you have peace of mind along the way.

Understanding KiwiSaver: What You Need to Know