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KiwiSaver gets a mini make-over

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Improvements to the KiwiSaver scheme will help many Kiwis saving for their first home or retirement

Since it was launched in 2007, KiwiSaver has been a great way for Kiwis to save for their first home or retirement.

From 01 April 19, changes to KiwiSaver make it even more accessible and allow more Kiwis to enjoy the benefits of being a KiwiSaver member.

Save for your first home faster

The original employee contribution rates were set at 3%, 4% or 8%. Many Kiwis felt the jump from 4% to 8% was a little steep but wanted more options to contribute from their wages at a slightly higher rate than just 3% or 4%. 

From 1 April 19, two new contribution rates are now available - 6% and 10%. So now you have much more choice as to how much you contribute from your wages to your KiwiSaver. For those of you saving towards your first home - this might help you get there a little bit faster!

You can change your employee contribution rate by filling out this form and giving it to your employer. Remember - you can only change your contribution rate once every three months.

Government contributions

Did you know that each year, the government contributes to your KiwiSaver account? For every $1 you contribute, the government puts in 50c, up to a maximum of $521.43. This was originally called a ‘member tax credit’.

However, the term ‘member tax credit’ didn’t really explain what the benefit was, so it was agreed to rename it to something a little bit more understandable - ‘government contribution’.

And the great thing is - if you’re eligible and contributing to your KiwiSaver account, you’ll receive a government contribution. Just another way to help grow your account!

Savings suspension

Life happens - and sometimes you need to put your KiwiSaver contributions on hold. And that’s ok. A savings suspension allows you to do exactly that.

Previously, you could go take a break from KiwiSaver contributions for up to 5 years (also known as a 'contributions holiday'). But, as you can imagine, being on an indefinite break can have a serious impact on your ability to save well for your retirement.

So, two changes to this option have been made:

    • Contributions holiday is now called ‘savings suspension’
    • The maximum amount of time for a savings suspension is now 12 months.

Of course, if you get to the end of your 12 months and still need to be on a break from contributing to KiwiSaver, you can renew your savings suspension. You’ll need to do this with IRD.

Two additional changes are scheduled for 1 July 19. These are specifically for Kiwis aged between 60-65:

  • Over 65’s will be able to opt-in

KiwiSaver eligibility has always been capped at 65yrs. But more people over the age of 65 wanted the opportunity to join KiwiSaver for the first time and increase their savings beyond retirement.

From 1 July 19, the eligibility threshold of 65 will be removed, allowing older members the opportunity to join KiwiSaver for the first time.

  • Removing the 5-year lock-in period for over 60’s

This affects current members who join KiwiSaver after the age of 60 and are subject to a five-year lock-in period before they can withdraw their savings when they reach retirement age (65yrs). From 1 July 2019, this five-year lock-in period will no longer apply.

If you joined KiwiSaver prior to 1 July 2019 and are subject to the five-year lock-in period, you’ll be able to opt out of this from 1 April 2020. Opting out may have an impact on your eligibility to receive both employer and government contributions, so it would be a good idea to discuss this first with your financial adviser.