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A Quick Guide to KiwiSaver
Please click here to view the AonSaver investment statement. This document contains more details of the changes.
The Basics
- KiwiSaver is a voluntary long term savings scheme designed to encourage New Zealanders to save for their retirement. The scheme started on 1 July 2007 and is open to all New Zealand citizens and permanent residents aged up to 65.
- The Government will give every KiwiSaver account holder a 'kick start' of $1,000. It will also contribute up to $5,000 to an account holder's first home purchase. If you are over 18 the Government will also match your KiwiSaver contributions of up to $20 p.w. Compulsory employer contributions of 1% commenced 1st April 2008 and increased to 2% on 1 April 2009.
- Employers are obliged to automatically enrol all new
employees who are:
- Between 18 and 65 years of age
- New Zealand citizens or permanent residents
- Employed for more than 28 days
- Not already a KiwiSaver member.
- Existing employees are not enrolled automatically, but can join KiwiSaver voluntarily by completing an application form. Click here to enrol now.
- Employees can choose to make contributions of 2%, 4% or 8% of their gross pay. Contributions are deducted from wages and paid to the IRD. IRD passes these onto a registered KiwiSaver scheme provider for investment.
- Employers are obliged to make compulsory contributions. Contributions started at 1% of gross wages rised to 2% at 1st April 2009. Employer contribution's are exempt from Superannuation Contribution Withholding Tax (in other words, tax free) up to 2% of the employee's before-tax pay.
More Detail
- An employee who is automatically enrolled can decide to
opt out within eight weeks of enrolment. A special form is
required which needs to be sent to IRD.
- If an employee wants to choose their own KiwiSaver scheme
provider, they can. They are not obliged to use their employer's
preferred provider.
- Employers can choose a KiwiSaver savings scheme for their employees, such as AonSaver. If neither they nor their employee chooses a scheme the IRD will allocate them to a default scheme. Employers choosing a preferred scheme provider for their employees are not deemed to be giving financial advice.
- Employees can take a contribution holiday of between three
months and five years after saving with KiwiSaver for 12 months.
- Savings are locked in to age 65. Early withdrawal is
possible in some special circumstances, such as:
- Serious illness or significant financial hardship
- Permanent emigration
- Purchase of first home
- Self-employed people, employees under 18, non-working
spouses and children can also join a KiwiSaver scheme by contacting
a scheme provider directly.
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