KiwiSaver is a voluntary long-term savings scheme set up by the New Zealand government to encourage people to save for their retirement. If you’re employed in the country, you can choose to contribute 3%, 4% or 8% of your gross (before tax) wage or salary to your KiwiSaver account. Your employer has to contribute as well, paying a minimum of 3% of your gross salary, while the government contributes in the form of tax credits (up to a maximum of $520 per year).
Finding out if you’re eligible for KiwiSaver
You don’t have to be employed to start your KiwiSaver. However, you do have to meet the following criteria:
- Be a New Zealand citizen or be entitled to live in New Zealand indefinitely
- Live or normally live in New Zealand
- Be under the age of eligibility for the New Zealand Super (currently 65)
Why open a KiwiSaver?
If you’re employed, the organisation you work for has to contribute at least 3% of your gross wage or salary into your KiwiSaver account. That’s on top of your own contributions. In addition, the government helps you grow your pension fund, too. The government provides a tax credit each year (if you are a contributing member aged 18 or over) of up to $521.
The KiwiSaver can also help you get on the property ladder, with the option to make a withdrawal for a first-time home purchase or take advantage of a deposit subsidy. You can read more about this in the section on Buying a Property with the Help of KiwiSaver below.
Choosing the right KiwiSaver for you
The KiwiSaver scheme you choose to invest in will often depend on your personal circumstances and age as well as your future financial goals. You can select your own KiwiSaver or allow your employer or the government to make the decision on your behalf.
Most KiwiSaver schemes have several different investment funds where you can place your money. Each fund invests money in different ways, such as bank deposits, bonds, shares and property. Choosing your KiwiSaver and the right investment options associated with the savings scheme are important as it can make a significant difference to your personal wealth in the long term. We can help you select the funds that are right for you. We will also ensure your personal savings, investment or pension strategy is going to provide you with the funds and lifestyle you want when you come to retire.
Buying a Property with the Help of KiwiSaver
If you have a KiwiSaver, you may be able to make a one-off withdrawal from your funds when you buy your first home. There are some rules associated with this option, however. For example, the original $1,000 kick-start amount must remain in your KiwiSaver. In addition, you must have been contributing to your KiwiSaver for three years or more in order to qualify for the home purchase withdrawal. You can only withdraw money for your first home and not for investment property.
You may also qualify for a KiwiSaver. HomeStart grant.There are currently two types of HomeStart grant. Your bdhSterling adviser would be happy to provide details regarding this.
For more information on KiwiSaver or to discuss your investment, savings or pension with one of our consultants, call or email us via our contact page.