KiwiSaver scheme

KiwiSaver Scheme FAQs

What is a KiwiSaver Scheme?

A KiwiSaver Scheme is an investment scheme that can help you save for retirement and can also be used to help you buy your first home. Your KiwiSaver scheme balance is made up of contributions from your salary, from your employer and from the government (provided you contribute yourself).

Is a KiwiSaver scheme right for me?

Joining KiwiSaver schemes are popular - but what are the main reasons to sign up?

Your employer and the government give you money

Employers are required to match your contributions (to a 3% cap) and the Government will give you up to $521 per year provided you make a minimum contribution of $1,042. So if you are an employee and over 18 years old, you are likely to qualify for the free money investing in your KiwiSaver scheme.

It can help you get into your first home

You can use your KiwiSaver scheme money as a deposit for your first home (as long as you meet a few requirements). Many young Kiwis are using their KiwiSaver scheme balance as a part of their desposit.

You'll earn money on your contributions

Many people think your KiwiSaver scheme balance is just what you, your employer and the government put in. But we put your money to work and keep it working, even on the weekends. Your contributions will continue to be invested as they roll in.

Your retirement will be more comfortable

The retirement landscape is changing in New Zealand. Living expenses have increased and not everyone will have a mortgage-free home in retirement, like many of our parents. New Zealand Superannuation might not give you the lifestyle you'd like.

It's likely you'll need extra money to keep you going through your retirement, and KiwiSaver scheme money becomes a large part of that. Even if you're not going to be retiring for quite a few years, it's worth thinking about keeping up your KiwiSaver scheme contributions. It's also a great idea to ask yourself if you can afford to increase them.

Who can join a KiwiSaver scheme?

Any New Zealand Citizen or Permanent Resident can join a KiwiSaver scheme

You cannot join a KiwiSaver scheme if you have a temporary, visitor, work or student visa.

There are different ways to join a KiwiSaver scheme. Depending on your situation you can enrol directly with a scheme provider. If you're under 18, there are different rules.

How much should I contribute to my KiwiSaver scheme?

The answer depends on what you want out of your KiwiSaver plan and what you can afford to contribute. Small changes in contributions today can make a big difference to your final balance.

How much you contribute depends on your own personal circumstances and objectives. You can contribute 3%, 4%, 6%, 8% or 10% of your salary. Your employer contribution is likely to be capped at 3%

In deciding what you should contribute, you need to strike a balance between what you can afford to contribute and what you want to achieve with your KiwiSaver plan (the income you want in retirement or the size of your first home deposit).

In general, the more you contribute, the more that you will have at the time of retirement or buying your first home. A 35 year old earning $80,000 a year contributing 3% of their income can expect around $640,000 at retirement, which will provide an income of $618 per week (including NZ Super). By contributing 6%, that same person can expect $968,000, providing an income of $771 per week. An extra $46 per week in contributions today (difference between 3% and 6% contribution rate) will lead to an expected extra $153 per week in retirement.

Check out kōura's blog post around how much you should contribute to your KiwiSaver scheme account.

How much does the Government contribute to a KiwiSaver scheme?

The Government will contribute up to $521.43 per year to your KiwiSaver scheme account. To reach this amount, you need to contribute $1,042.86

For every $1 you put in (via Employee or Voluntary contributions), the Government gives you another 50 cents, up to a maximum of $521.43 a year. To maximise the Government Contribution, you'll need to put in at least a year (July 1 of one year to June 30 of the next year)

To recieve the Government Contribution you must be between the ages of 18 and 65. You also need to be living in New Zealand, unless you're a Government employee, working as a volunterr for a charitable organisation or your job meets one or more of the requirements of the Student Loan Scheme Act 2011.

If you do not contribute via your employer, we recommend that you set up a weekly ($20) or monthly ($90) direct debit. You will hardly notice the contributions and it will be the best returning investment you will ever make.

How will I know if I have contributed enough to receive my Government contribution?

kōura will send you an email and tell you if you have received the maximum Government Contribution (generally referred to as Member Tax Credit).

Why is it important to get advice on my KiwiSaver scheme?

53% of Kiwis are in the wrong KiwiSaver scheme, being in the wrong fund can result in your KiwiSaver scheme balance being up to 30% lower at your retirement than if you had an appropriate set of funds. That's hundreds of thousands of dollars you are putting at risk.

Being in a fun which is too conservative (predominantly cash or income assets) will mean that you are at risk of not meeting your objective as the returns will be lower Being in a fund which is too risky means that you might be exposed to a market downturn at a time when you need to access your capital.

kōura offers you free advice to make sure you always know what portfolio of funds in best for you. They are a digital adviser that's able to understand your KiwiSaver scheme investment objectives and risk appetite and tailor a profile that's entirely personalised to you.

Once I sign up to a KiwiSaver scheme, am I able to stop contributing?

You can stop contributing to your KiwiSaver scheme after you have signed up to KiwiSaver scheme by way of a Savings Suspension. However, there are some conditions:

  • If you have been a KiwiSaver scheme member for more than 12 months you can have a Savings Suspension for between 3 and 12 months by sending a form to IRD. You can restart your contributions at any point in time and you can extend the Suspension if you need to.
  • If you have been a KiwiSaver scheme member for less than 12 months, you will need to apply for an early Savings Suspension. This will only be granted in the event of Financial Hardship.

You need to remember that if you stop contributing to your KiwiSaver scheme, your employer's compulsory contributios and the Government Contributions will also stop. A small break in contributions to your KiwiSaver scheme can make a significant difference in the money available to you at retirement.

Why kōura?

kōura is a licensed KiwiSaver scheme regulated by the Financial Markets Authority. They were created to give Kiwis more money for their retirement or first home. They create a personalised portfolio for you that's designed to work with your goals and risk appetite, ultimately optimising your KiwiSaver scheme returns.

They use a lot of smart technology to direct your money where it needs to go. But they also have some smart people in the background telling the computer what it should do. Check out their wonderful team here!

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