How to Use KiwiSaver to Prepare for Your Future

Date Jul 13, 2020
Blog category Kiwisaver
By Michael Speight


KiwiSaver has gained nearly 3 million members since its launch in 2007. Whether you’re part of that number already or looking to join it, you’ll need to compare KiwiSaver fund benefits now and again.

Piggy bank with coins around it

In this blog, we go over a few ideas that will help you get the most out of the scheme you choose.

What makes up your KiwiSaver

The basic equation for your KiwiSaver is simple.

The fund consists of contributions made by you, the government, and your employer, plus or minus investment returns, minus any withdrawals you make, and finally any fees or taxes that apply. 

For most members, KiwiSaver is work-based, meaning their contributions are taken directly from their pay.

You can easily adjust your work contributions with the help of your employer, selecting to contribute either 3 per cent, 4 per cent, or 8 per cent of your income.

If you’re not working for an employer, you can contact a provider instead, and decide to pay contributions directly to them, after agreeing on an amount.

Any KiwiSaver member, work-based or not, needs a provider. These are the private companies that manage the schemes available to you, and are in charge of the second part of the equation above – the investment returns.

It’s important to keep in mind that KiwiSaver is not guaranteed by the Government, which means the choices you make about which provider to invest with are made at your own risk.

Many people tend to focus on the fees associated with a scheme, but paying close attention to the investment portion of your KiwiSaver will ensure that it’s working best for you.

So what about the third part of that equation, withdrawals? In most cases, you won’t be able to make any until you turn 65, the required age for NZ Super (at time of writing).

There are a few conditions that may allow you to make a withdrawal, including buying your first home, permanently leaving the country, or suffering serious financial or health difficulties.

Keep your KiwiSaver relevant to you

The best thing to know about KiwiSaver is that you’re free to make changes to it at any time.

You may want to adjust things solely for comfort – changing your contribution level or switching providers for example – but sometimes you may be required to alter your KiwiSaver.

Staying aware of these required changes will help you best use what KiwiSaver has to offer.

As most members are work-based, it follows that for many the most frequent changes they need to make are around their job.

Leaving work, starting a new job, or working multiple jobs all affect your KiwiSaver, and may require you to either update your details, or decide if you want to make contributions directly to a provider, instead of through an employer.

Outside of work, some facets of your personal life may affect KiwiSaver too.

Turning 18 makes you eligible to receive the member tax credit, and if you’re working, your employer is required to start making the compulsory employer contributions to your KiwiSaver account.

Being overseas can change your access to the full member tax credit, but if you are not being paid by an NZ-based employer, you can still make voluntary contributions by yourself.

Compare KiwiSaver fund types

All these ideas boil down to a simple, easy solution: pick what’s best for you.

Only you know what level of investment risk is right for your lifestyle, and which provider fits best with your values.

\With a good KiwiSaver comparison tool like the one you can find on glimp, it doesn’t need to be a constant hassle. Just check in every now and then to make sure you’re still enrolled in a plan you love.

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