Ever wondered how to use KiwiSaver? How about using your KiwiSaver to buy a house, pay off debt, retirement, or using it for other emergencies? Well, whether it's your first time to open a KiwiSaver account, or you've been saving up for a good enough time, here's your guide on how to make full use of your KiwiSaver fund.
KiwiSaver is a voluntary social contribution scheme by the government. This aims to help New Zealanders save up for their retirement. As long as you’re a New Zealand citizen or permanent resident, you can take advantage of this program.
Besides retirement, you can also use your KiwiSaver scheme to pay off debt, purchase your first house, move to another country, pay for medical treatment or funeral costs, and more. But how does this work, exactly?
Read more on how to use your KiwiSaver scheme in different ways.
While there’s no retirement age set by the government, you can withdraw your KiwiSaver funds for retirement once you turn 65, or what's considered the age of eligibility. This is according to the New Zealand Superannuation — more commonly known as NZ Super. It’s the government’s pension scheme to Kiwis, regardless of their salary, savings, investments, and taxes when they’re still in the workforce.
NZ Super is eligible to citizens and legal residents of New Zealand. Also, you have to reside in New Zealand for 10 years after age 20. Five years of this duration must be after you turned 50 years old.
For example, those who get NZ Super when they’re 55 years old can take advantage of their pension as soon as they turn 65. Kiwis who get one when they’re 62 can only get their pension once they turn 67, given they meet the residency qualification.
Even if you’re still working, you can be eligible to NZ Super. You can still get one even when you’re past age 65, but you can only withdraw your money after 5 years. Of course, this is in the premise of meeting the requirements of residency.
Your NZ Super payments are set by the government every year. They’re adjusted depending on the cost of living and average wages. You also receive varying amount if you’re married, single, or if your partner doesn’t have NZ Super. Payments are processed fortnightly.
If you like to withdraw your savings all at once, you can also do so. However, do note that your KiwiSaver account will close once you take out all your money. You may not be able to re-apply for another scheme at any given point.
Another financial situation Kiwis use their scheme for is in purchasing their first home. Any Kiwi who’s been a member for at least three years can make a one-off withdrawal in their account. This is regardless of age and start date of your KiwiSaver.
Aside from being a member for three years, there are several qualifications for withdrawals as a first time home buyer. You’re entitled to take out money in your account for as long as:
You can still use your KiwiSaver scheme even if you purchased a home before. Simply submit your application to Kāinga Ora. They will assess whether your financial situation is the same as with first time home buyers. Check the qualifications below.
You can take out as much money for your home purchase, given that you leave at least $1,000 in your account. Aside from your KiwiSaver, you may also be eligible for the First Home Grant. You can receive as much as $5,000 for older and pre-owned homes, and as much as $10,000 for a new home or land to build one.
It’s not the most common use of KiwiSaver, but several New Zealanders use it to fund their immigration. Depending on where you move, you may be able to keep your money with you. Here’s what you need to know about using KiwiSaver when moving overseas.
You can’t keep your KiwiSaver scheme wherever you move. After all, it’s regulated by the New Zealand government. However, if you’re moving to Australia, you may be able to transfer your KiwiSaver savings to an Australian Superannuation Scheme. Do note that not all Aussie Super schemes accept KiwiSaver transfers.
If you’re moving to another country besides Australia, you can withdraw your KiwiSaver savings after living overseas for a year. However, contributions made by the government can’t be withdrawn. Those will be returned to the government.
To apply, you need to present proofs of leaving New Zealand and settling in another country. Your provider may also require you to fill out a form before processing your request, so it’s best to consult them too.
If you’re experiencing financial hardship, KiwiSaver is a great way to avoid going bankrupt. It’s a great way to pay for your minimum living expenses like mortgage, utilities, medical expenses, or day-to-day living expenses. The following aren’t considered as a part of minimum living expense. Note that these restrictions may differ per provider.
You may directly contact your KiwiSaver scheme provider if you plan to withdraw your money to finance your daily needs. If you’ve only been a member for two months, contact Inland Revenue for more information.
You can withdraw all the money from your account, excluding your kick-start and contributions from the government. However, it’s still up to provider's assessment whether to reward the pay-out in full amount. Depending on the provider, it may take at least 20 business days before receiving the money.
Financial hardship is a broad term, so withdrawing your KiwiSaver for this reason is often lengthy and stressful. To have an easier process, make sure you prepare the following requirements ahead of time:
Remember to be truthful about your information. Your KiwiSaver scheme provider can recheck everything to fully determine your financial situation. Lying about your details often leads to your application being denied.
While KiwiSaver can be used for different financial circumstances, it’s still an investment scheme. Upon application, you have the choice to choose from conservative, balanced, or growth funds. Each one poses different risks so the growth of your money can vary greatly.
Although regular investment funds and KiwiSaver scheme are similar, they can work very differently. Check this comparison below:
|KiwiSaver Scheme||Investment Fund|
|Managing the money actively||Yes||Yes|
|Diversified investment options||Yes||Yes|
|Access to your investment anytime||Yes||Yes|
|Access to your savings anytime||Not until 65 (in most cases)||Yes|
|Employer and government contributions||Yes||No|
|First time home buyer benefits||Yes||No|
Ultimately, you have the final choice. Fund managers can give suggestions according to your financial situation, but it’s always up to you. If you want a high-return investment, choose a growth fund, which invests 80% of your money. However, this also comes with the highest risk.
If you’re only after a steady investment, choose conservative funds, which invests only 20% of your money. While this comes with low return, this comes with the lowest risk, too. Otherwise, choose balanced funds, which invests 50% of your money and keeps half of it as savings.
The best way to know before finalising your scheme is to talk to a professional fund manager. They can help you decide what's best for you. However, do note that consulting one may incur professional fees.
Luckily, you can check and find the best one yourself, without paying for any fees! Simply visit glimp and use our free KiwiSaver comparison tool. We compare different schemes from different providers, and match it according to your needs. We tailor the results, so you can easily find the best scheme for you.
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