Reading time: 6 minutes
What is KiwiSaver? It's an easy and affordable way to save and invest for our retirement years. Most of us can benefit from joining KiwiSaver, if we haven’t already. Here’s how KiwiSaver works and what the main features are.
KiwiSaver is a voluntary savings scheme set up by the government to help New Zealanders to save for their retirement.
You can choose to contribute 3%, 4%, 6%, 8% or 10% of your gross (before tax) wage or salary to our KiwiSaver account. Your employer has to contribute as well – at least 3% of your gross salary.
Along with KiwiSaver employer contributions, there’s an annual government contribution as well.
Your savings are invested on your behalf by the KiwiSaver provider of your choice. If you don’t choose a provider, Inland Revenue will assign you to one of the nine default KiwiSaver schemes.
To be able to join KiwiSaver you don’t have to be employed, but you do have to be:
Find out more about who can and can't join KiwiSaver on the Inland Revenue KiwiSaver website.
There are three ways to join KiwiSaver:
Self-employed? Not currently working? Not a problem – just contact a KiwiSaver provider to sign up and arrange a regular contribution amount. For a list of KiwiSaver providers, see the Inland Revenue KiwiSaver website.
Also, find out more about how to join KiwiSaver on the Inland Revenue KiwiSaver website.
The question of signing up to KiwiSaver is less ‘why’ and more ‘why not?’ because of the benefits it offers.
Here's how KiwiSaver works:
When buying your first home you may be able to make a one-off withdrawal of most of your KiwiSaver savings – as long as you’ve been a KiwiSaver member for at least three years. You also may even qualify if you have owned property previously.
In addition to a KiwiSaver savings withdrawal, there’s also the First Home Grant. If eligible, the government may also give you up to $5,000 towards buying an older, existing home, or up to $10,000 towards buying a new home or land to build a new home on.
Visit the Kāinga Ora website for more information.
If using KiwiSaver to save for retirement, you can’t touch your money until the age you get New Zealand Superannuation (NZ Super) which is currently 65. Note that KiwiSaver is open to those over 65 to join as well.
You can choose the KiwiSaver scheme your savings are invested with or let your employer or the government choose one for us. KiwiSaver schemes are run by ‘providers’ like banks and investment companies and typically have a number of funds to choose from.
Each fund has a different mix of things it invests in – such as bank deposits, bonds, shares and property.