What should I know about KiwiSaver?
KiwiSaver is most Kiwis’ second-biggest asset over a lifetime. But do you know the ins and outs of how it works?

It’s important to your future that KiwiSaver is working for your future, but it shouldn’t be complicated. Get a better grip of your KiwiSaver account and, in turn, get a better grip of your retirement plan.

What is KiwiSaver?
KiwiSaver is a savings initiative to help set you up for your retirement and possibly to buy your first home. Most KiwiSaver members build up their savings through regular contributions from their pay. However, you can also pay into it yourself whenever you like.

How does KiwiSaver work?
You can contribute each payday at a rate of 3%, 4% or 8% of your wages. If you’re contributing through your wages or salary, your employer must contribute a minimum of 3% too. The Government may also contribute up to $521.43 a year if you’ve contributed a minimum of $1,042.66 within a 12-month period.

Your balance is locked in to a variety of investments, and the types of investment it goes into depend on the risk you’ve agreed to take with your provider. You could decide to play it safe and stick with a low-risk form of investment, or you might want to really go for it and put your money into a higher-risk form of investment. Each type of risk has its own benefits and pitfalls.

You pay a fee to your KiwiSaver scheme account provider, which covers the cost of the management and administration of your investments.

How do you join KiwiSaver?
There are only three ways to join KiwiSaver. You can automatically enrol when you start a new job, join up through a KiwiSaver provider or join through your employer.

What age do you have to be to have a KiwiSaver account? 
Any age under 65 (the legally appointed retirement age).

If you’re between 16 and 18 you can join KiwiSaver and contribute, but you’re required to contact the KiwiSaver provider directly to sign up (rather than through your work). If you’re 16 or under you require parental permission to join KiwiSaver, but if it works for you to put money aside, it’s never too early to start saving for your retirement.

Can you take money out of KiwiSaver?
If you’re eligible, you may be able to withdraw some or all of your KiwiSaver savings to put them towards purchasing your home.

However, depending on the circumstances you might also be eligible to withdraw funds for financial hardship or serious illness, if you’re moving overseas permanently or if you’re transferring your pension to another country.

Otherwise, your balance is generally locked in and most people become eligible to get their money when they qualify for New Zealand Superannuation (currently age 65).

Not sure if you have a KiwiSaver account?
Check with your employer or Inland Revenue.

What is a default fund and how do I move out of it?
If you haven’t chosen a KiwiSaver provider or scheme for yourself, and if your employer doesn’t have a preferred provider, Inland Revenue will set you up with a government-appointed default fund. As part of this arrangement your money will automatically be put into the least risky (otherwise known as a conservative) fund. So when you have the opportunity you should really re-evaluate whether this is the right choice for you and your personal goals. This is a good time to get independent advice if you’re unsure about what to do.

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AdviceFirst is a Financial Advice Provider (FSP23242).