It’s been in the news, so what could the proposed amendments to the KiwiSaver scheme mean for you? Here’s the lowdown:
A new taxation bill was introduced to Parliament on 28 June 2018. Named the Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill, and there are five proposed amendments to the KiwiSaver Act 2006.
• Providing additional KiwiSaver employee contribution rate options of 6% and 10%
• Reducing the maximum contributions holiday* period from 5 years to 1 year
• Changing the name of the contributions holiday* to Savings Suspension
• Allowing over-65-year olds to opt-in to KiwiSaver
• Removing the 5-year lock-in period for new KiwiSaver members
The proposed Bill is still in the early stages of being reviewed. Public submissions are being called for now so if you want to have your say, you can enter a formal submission through Parliament’s website here until August 13 2018.
What do the proposed changes mean for you?
• You, through your place of work, will have the option to make a contribution of 3%, 4%, 6%, 8% or 10% of your earnings. Currently, you only have the option to make contributions of 3%, 4% or 8%
• Contribution holidays* will more accurately be renamed to Savings Suspension
• The maximum contribution holiday period will reduce from 5 years to 1 year. The aim of the shortened time period is that it will be less disruptive to your long-term saving goals
• Currently, only people 65 years and under can opt-in to a KiwiSaver scheme. Offering KiwiSaver to those over 65 years means they will be able to choose to use this as a low-cost method of investing
• Currently, if you join KiwiSaver after age 60 you must remain a member of KiwiSaver for at least 5 years before you can make a retirement withdrawal. This five year requirement includes time spent in a complying superannuation scheme if you are transferring from such a scheme. The proposed change will remove this five year requirement for new KiwiSaver members from 1 July 2019, creating more flexibility for new members over 60. However, the five year rule will still apply to members who have joined before that date, or who transfer to KiwiSaver from a complying superannuation scheme they joined before 1 July 2019.
If you have any questions you want to be answered about your KiwiSaver scheme contact our KiwiSaver Specialist Jermaine on firstname.lastname@example.org
*A contribution holiday is when you’ve been contributing into your KiwiSaver account for over 12 months and want to take a break from contributing into your KiwiSaver account.
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