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How Does KiwiSaver Work?

3 Apr 2024

How Does KiwiSaver Work?

What is KiwiSaver, and Why Is It Valuable?

KiwiSaver is a voluntary retirement savings scheme designed to help people in New Zealand save for their future. It was introduced in 2007 by the government to increase the level of savings by Kiwi households and support New Zealanders in retirement.

According to data publicly available from Inland Revenue, there are currently over 3.2 million New Zealanders enrolled in KiwiSaver.

Is KiwiSaver Taxed?

Your KiwiSaver contributions are made after your income has been taxed, therefore your contribution amounts are not taxed while in your KiwiSaver account. The money you withdraw from your KiwiSaver account also isn't taxed when you withdraw it because you've already paid tax on it.

Any earnings accumulated from savings in your KiwiSaver account are taxed – you pay tax on investment gains in your KiwiSaver account.

Some refer to this as TTE – taxed, taxed, exempt. You pay income tax on money you contribute to the scheme; you pay tax on the returns the investments make; you pay no tax when you withdraw money from KiwiSaver.

How To Change KiwiSaver Provider

If you don't choose which KiwiSaver provider you prefer at the time of opening your KiwiSaver account, Inland Revenue will assign you to one that matches your profile. You can, however, easily change your KiwiSaver provider for this or any other reason.

The best thing to do is to contact the new provider and get them to manage the process for you. You'll need to provide permission and notification to your current provider that you wish to change KiwiSaver providers, and they will handle the paperwork for you.

How To Change KiwiSaver Contribution

Regardless of who your KiwiSaver provider is, it should be straightforward and easy to change the amount that you contribute to your KiwiSaver account.

You can change your KiwiSaver contribution amount either through your employer, myIR account or KiwiSaver provider.

Contribution rates can be changed once every three months, unless your employer agrees to a shorter timeframe.

Is KiwiSaver Worth It?

Putting money into a KiwiSaver account is worthwhile for a number of reasons:

  • When you contribute to a KiwiSaver scheme (and are aged 18 or over), the government will contribute 50 cents per dollar that you contribute up to $521.43 each year until you're 65.
  • If you work for an employer that contributes to your KiwiSaver account, you have the opportunity to build up your savings faster than you would outside of KiwiSaver. Employers are required to contribute close to 3% of your gross salary if you contribute (and are 18 years of age or older).
  • When you put your money into a KiwiSaver account, your KiwiSaver provider invests your money on your behalf, earning money for you. They are experienced, knowledgeable investment companies that stay up to date with economic factors that influence the market. Chances are, they have more knowledge about financial matters and have more time to devote to following financial trends than the average Kiwi saver.
  • If you've been contributing to a KiwiSaver scheme for a minimum of 3 years, you may also be eligible for a Kāinga Ora First Home Grant of up to $10,000.

How Much KiwiSaver Can I Withdraw?

The money that you put into your KiwiSaver account is meant to be used for your retirement. You're not, therefore, allowed to withdraw funds from your KiwiSaver savings until you are eligible to receive the New Zealand Superannuation at age 65.

Once you turn 65, you can withdraw any or all of it. You don't need to withdraw your savings at 65 and you can continue to contribute. But if you do want to withdraw, you can take out your contributions, your employer's contributions, the government's contributions, as well as the returns earned.

There are special circumstances under which you may be able to qualify for a withdrawal of funds before the age of 65 (see below). If that applies to you, you must leave at least $1000 in your KiwiSaver account after withdrawing funds for reasons other than an estate disbursement.

When Can I Withdraw Money From KiwiSaver?

Once you turn 65, you can withdraw money from your KiwiSaver account. As we've said, you can withdraw parts of it or all of it. You may choose to slowly withdraw money, essentially paying yourself a regular amount each month and leaving the balance in your KiwiSaver account to continue to grow.

Funds may also be eligible for withdrawal from your KiwiSaver account for special circumstances. These include: buying your first home, paying off debts if you become bankrupt, paying a tax liability or student loan using a foreign superannuation transfer, disbursement after your death.

Can I Use My KiwiSaver as a Deposit?

If you're buying your first home, you are able to make a one-off withdrawal from your KiwiSaver account, as long as you've held the account for at least three years.

There are some circumstances where you may be able to use money from your KiwiSaver account for a property that is not your first home. Your KiwiSaver provider may ask you to contact Kāinga Ora to determine if you're in the same financial situation as a first-home buyer.

You may also be eligible for a Kāinga Ora First Home Grant of up to $10,000 if you've been contributing to a KiwiSaver scheme for a minimum of 3 years.

Can You Use KiwiSaver to Buy Land?

Yes, you can use your KiwiSaver one-off withdrawal to purchase a house, a house and land package, or a section/land without a house.

For more information about KiwiSaver, you can visit the Inland Revenue KiwiSaver website at Alternatively, for reliable KiwiSaver guidance and advice, feel free to talk to the Lowe & Co team today. We're happy to help.


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