KiwiSaver - Making saving for retirement easier
KiwiSaver is a new voluntary, work-based savings scheme to help New Zealanders with their long-term saving for retirement. It is run by Inland Revenue and starts on 1st July 2007.
No matter what your job in the health sector it’s important to know what KiwiSaver is and how it may affect you.
KiwiSaver in a nut shell
- It’s voluntary and is designed to help you save money for your long-term future
- Any Kiwi can join KiwiSaver, but it has been specifically designed for people in work between 18 and 65 years of age
- As a KiwiSaver member you are entitled to the following benefits:
- A one-off tax free kick-start of $1000
- Member tax credit up to $1040 per year (there are some requirements)
- A fee subsidy of $40 paid to your scheme provider each year
- A housing subsidy for first home purchases of up to $5000 after contributing for five years (if you meet Housing New Zealand’s requirements)
From 1 July this year if you start a new job earning a salary you will be automatically enrolled in KiwiSaver. If you are automatically enrolled you will have eight weeks to opt out and any contributions already made will be refunded to you. If you are an existing employee you won’t be automatically enrolled but you can choose to join by asking your employer or by contacting a scheme provider direct.
KiwiSaver contributions will be 4% of your before-tax pay or you can go for the higher rate of 8%. Your contributions are paid to Inland Revenue which then passes them to a KiwiSaver scheme provider who will invest your money in a registered KiwiSaver scheme. If you do not choose a scheme you will be allocated to a default scheme or to your employer’s chosen KiwiSaver scheme if they have one.
Although your savings will be locked in until Superannuation age (currently 65), you will be able to withdraw them if you face significant financial hardship, suffer serious illness, permanently leave New Zealand or buy your first home. KiwiSaver also allows you to take contributions holidays for up to five years. When this ends your employer will begin deductions unless another contributions holiday is taken.
Other benefits include:
- The option to channel half of your contributions to pay your mortgage
- KiwiSaver moves with you
- Voluntary lump sum contributions can be made at any time direct to Inland Revenue or to your scheme provider and;
- From April 2008 your employer will begin to contribute 1% (this is currently a proposal only and is not law)
KiwiSaver may not be right for everyone so it’s important you understand what best suits your circumstances - talk to your HR department, your union, whanau, friends and/or financial advisor before making your decision.
More Information
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www.unionsuper.org.nz
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The union KIWISAVER Campaign is all about getting the best out of KiwiSaver for union members. The leaflet below is a good place to start learning about the scheme. It explains the key aspects of KiwiSaver and tells you where you might get further information. Any decision on joining a scheme is up to you to decide.
Union Kiwisaver Leaflet (pdf) |
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www.sorted.org.nz
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The New Zealand Retirement Commission's website www.sorted.org.nz provides independent financial advice, including information about KiwiSaver.
Sorted also has an online KiwiSaver calculator to help you work out how much your contributions would be each pay, and how much you’ll have saved by age 65. |
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www.kiwisaver.govt.nz/
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Inland Revenue will manage KiwiSaver and the KiwiSaver website explains the scheme in detail. Employee and employer guides are now available:
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