KiwiSaver

What is KiwiSaver?

Kiwisaver is a voluntary savings scheme designed to help you save for your retirement. It was introduced by the New Zealand government in 2007 to encourage people to save for their retirement and take some of the pressure off the government-funded pension scheme.

 

How does contributions work?

Contributions to KiwiSaver can be made by both you and your employer. You can choose to contribute either 3%, 4%, 6%, 8% or 10% of your gross salary to your KiwiSaver account. Your employer is also required to make contributions on your behalf, which is currently set at a minimum of 3%. If you're self-employed, you can still join KiwiSaver and make contributions.

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Who is my Provider?

Your KiwiSaver provider is the company that manages your KiwiSaver account and invests your money on your behalf. There are currently more than 30 KiwiSaver providers in New Zealand, ranging from large banks to specialist investment companies.

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How do I choose a Provider?

Choosing the right KiwiSaver provider is an important decision, as it can have a big impact on your retirement savings. Some factors to consider when choosing a provider include:

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1. Fees: KiwiSaver providers charge different fees for their services, so it's important to understand what you'll be paying and how it compares to other providers.

2. Investment options: Different providers offer different investment options, so it's worth considering what types of funds and investment strategies are available.

3. Reputation: You may want to consider the reputation of the provider, including their track record of performance and their customer service ratings.

4. Other services: Some providers may offer additional services, such as financial planning or insurance, that could be valuable to you.

 

How do I choose the right fund?

Once you've chosen your KiwiSaver provider, you'll need to decide which fund to invest in. Most providers offer a range of funds to choose from, each with different investment strategies and risk profiles.

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What are my fund choices?

There are four main types of KiwiSaver funds:

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1. Conservative: These funds invest mainly in low-risk assets like cash and fixed interest investments. They are suitable for people who want to protect their savings and are willing to accept lower returns.

2. Balanced: These funds invest in a mix of low and high-risk assets, including shares, bonds, and cash. They are suitable for people who want a balance between risk and return.

3. Growth: These funds invest mainly in high-risk assets like shares and property. They are suitable for people who want to maximize their returns over the long term but are willing to accept higher risk.

4. Aggressive: These funds invest almost entirely in high-risk assets like shares and property. They are suitable for people who have a high risk tolerance and want to achieve maximum returns over the long term.

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When choosing a fund, it's important to consider your age, financial goals, and risk tolerance. For example, if you're young and have a long time until retirement, you may want to choose a growth or aggressive fund to maximize your returns. However, if you're close to retirement or have a low risk tolerance, a conservative or balanced fund may be more appropriate.

 

There are ages and financial life stages for Kiwisavfer fund choices.

For example:

• In your 20s and 30s: You may want to choose a growth or aggressive fund to maximize your returns over the long term.

• In your 40s and 50s: You may want to start transitioning to a more conservative or balanced fund to protect your savings as you approach retirement.

• In your 60s and beyond: You may want to choose a conservative or balanced fund to ensure your savings are protected and provide a steady income in retirement.

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What about tax?

Your KiwiSaver contributions are subject to certain tax rules. Your contributions are taxed at your marginal tax rate, which means the more you earn, the more tax you will pay on your contributions. However, your KiwiSaver fund may also receive tax credits and other tax benefits that can help boost your savings.

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When can I withdraw my funds?

You can withdraw your KiwiSaver funds when you reach the age of 65, if you are diagnosed with a terminal illness or move abroad permanently. However, you may also be able to withdraw your funds earlier in certain circumstances, such as to purchase your first home or if you experience significant financial hardship.

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First home buyers

If you're a first home buyer, your KiwiSaver savings can help you get on the property ladder. You may be able to withdraw some or all of your KiwiSaver funds to put towards the purchase of your first home, subject to certain criteria. Additionally, you may be eligible for a KiwiSaver HomeStart grant, which can help you with your deposit and other associated costs.

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