$500 Of Free Money From KiwiSaver? Here's How

Summary of KiwiSaver

• What is Kiwisaver?
• How much should I contribute to Kiwisaver?
• Employee’s contribution
• Employer’s contribution
• Can I still enroll in Kiwisaver when I’m self-employed?
• How to get Kiwisaver government contribution?
• How to use money in Kiwisaver?

What does it mean to save for your retirement? How much do you actually gain over time?

Before Kiwisaver, a lot of people just saved up for their retirement all on their own. No definite age is being imposed for when you should retire in New Zealand, but on average, around 80% are expected to live until 90 or longer once they turn 65 years old. You can have all the time and money to have the lifestyle that you want, granted that you have the funds to spend during your retirement. 

What is Kiwisaver? 

Luckily for Kiwis, they can opt to set aside a portion of what they earn to a work-based savings fund called Kiwisaver. In 2006, the NZ government enacted the Kiwisaver law that aids individuals and employees to save up for their retirement. It’s a voluntary contribution scheme Kiwis can start early on.

KiwiSaver investors can also use their funds for special circumstances such as buying their first house, for when they get ill, or other financial hurdles along the way. You can sign up for a Kiwisaver whether you’re employed or not. For employees, automatic deductions to their salary will take effect upon:

• starting new employment with an employer that is not an exempt employer; and
• is not a secondee; and
• starting the new employment, is 18 years old or older; and less than the New Zealand superannuation qualification age.

Kiwisaver is a long-term retirement fund 

The law aims to increase Kiwis’ financial independence by giving people a cushion for their retirement.

How much should I contribute to Kiwisaver?

Employee’s contribution

You can choose to contribute 3%, 4%, 6%, 8% and 10% of your salary depending on how much you’re willing to put in. So, if you make $100 a week and opt to take 3% of your weekly salary to your Kiwisaver, $3 will be accorded to your account. You should automatically be enrolled in one of Kiwisaver’s default providers upon your employment. 

If you’ve been an existing employee even before Kiwisaver was introduced, you can ask your employer about your Kiwisaver contribution to be deducted from your pay by submitting Kiwisaver forms KS3 and KS2.  

Employer’s contribution

Aside from your contribution, your employer is likewise required to give their share, which is 3% of your gross earnings, to your Kiwisaver account. This compulsory employer contribution (CEC) is obligatory for employers if their employees meet the standard requirements such as:

• 18 years old or older
• under 65 years old or those that have not been a KiwiSaver or complying fund member for five years (whichever date is later)
• Those who have KiwiSaver or a complying fund and you deduct KiwiSaver contributions from their salary or wages
• not a member of a defined benefit scheme

Can I still enroll in Kiwisaver when I’m self-employed? 

Of course! Kiwisaver is open for all Kiwi residents who are eligible to sign up for an account. Regardless of whether you’re employed or not, you’re encouraged to get a Kiwisaver account so you can start saving for your retirement. 

There are 9 official Kiwisaver default providers you can choose from with a 7-year term effective from July 1, 2014 to July 1, 2021.

1. AMP
2. ANZ
3. ASB
4. BNZ
5. Grosvenor
6. KiwiBank
7. Mercer
8. Fisher Funds
9. Westpac

You can also select from this list of Kiwisaver providers to begin with your contributions:

• Amanah KiwiSaver Limited 
• Aon New Zealand 
• Booster Investment Management 
• Civic Financial Services
• Craigs Investment Partners Superannuation Management Limited 
• Generate Investment Management Limited 
• Implemented Investment Solutions Limited 
• Kiwi Wealth Limited 
• Lifestages 
• Medical Assurance Society NZ Limited 
• Mercer NZ Limited 
• Milford Funds Limited 
• New Zealand Anglican Church Pension Fund 
• New Zealand Funds Management Limited
• Nikko Asset Management New Zealand Limited 
• Pathfinder Asset Management
• Pie Funds Management Limited 
• QuayStreetAsset Management New Zealand Limited 
• SBS Bank
• Simplicity 
• Summer 
• Superlife

You can also pay your contributions through the Inland Revenue Department through Internet Banking which can be accessed on web and mobile. 

How to get free money from Kiwisaver government contribution?

As long as you contribute money to your Kiwisaver account and earn at least $1,042.86 between July 1 to June 30 each year, the NZ government can top it up to $521.43 annually. That’s .5 cents for every dollar that you contribute during the year which can add up to least $5,000 in over 10 years. The amount being added by the government to your Kiwisaver is just an extra to what you will be receiving like pension and other benefits that you’re entitled to from your company. It’s “free money” that you’re earning while contributing to your account at the same time. 

Read: In Life and Death: Your Guide To KiwiSaver Withdrawal Options

How to use money in Kiwisaver?

Your Kiwisaver money can be utilised for specific circumstances such as buying your first home, moving overseas, health reasons, and when you have financial trouble you need to fix. 

Using KiwiSaver to buy a house

You can withdraw a portion of your savings when you have been in Kiwisaver for at least 3 years. 

Using KiwiSaver to move abroad

If you plan on moving to another country, let’s say in Australia, you can easily transfer your Kiwisaver funds to an Australian superannuation scheme. If however you’ve been staying in a different country for around a year or so, you can have all your money withdrawn from your Kiwisaver account. 

Using KiwiSaver for medical needs

You can request to have your funds taken out if you’re diagnosed with a health condition that would affect your capability to work. There’s also an option to stop your Kiwisaver contributions for serious illness by applying for a savings suspension. 

Using KiwiSaver for other financial emergencies

Send a request with proof that you’re experiencing significant financial hardship to get a part or all of your contribution in your Kiwisaver account. 

Significant financial hardship includes:

• Not able to meet minimum living expenses
• Cannot pay house mortgage, and your mortgage provider seeks to enforce the mortgage
• Pay for hospital bills or for a medical treatment for a dependent member of the family
• Funeral costs of a dependent member of the family

This is just the start. Learn to plan and use your KiwiSaver wisely, and maybe this can be your stepping stone towards other investment options in NZ. Until then, you can always choose the right KiwiSaver fund for you here at glimp!