KiwiSaver

When you start working in New Zealand, you will be offered the opportunity to join KiwiSaver. KiwiSaver is a voluntary work-based savings initiative designed to encourage New Zealanders to save for their retirement.

You are eligible to join KiwiSaver if you are a New Zealand citizen or permanent resident aged under 65 - migrants on work or other temporary permits are not eligible to join.

• Employee KiwiSaver Contributions
• Employer KiwiSaver Contributions
• Government KiwiSaver Contributions
• KiwiSaver Fund Access
• KiwiSaver and New Zealand Tax
• Keeping Track of your KiwiSaver
• UK Pensions and KiwiSaver
• Australian Superannuation and KiwiSaver
• Is KiwiSaver Right for You?

Employee KiwiSaver Contributions:

Employers deduct 2% (or more if you like) of your pre-tax pay, and deposit it into your KiwiSaver account, which can be held via one of a number of fund managers - either your employer's preferred scheme or one of your own choosing. You can only have one KiwiSaver account at any time.

Employer KiwiSaver Contributions:

Employers also make matching contributions of 2% to employee's KiwiSaver accounts.

Government KiwiSaver Contributions:

Each new KiwiSaver account is credited with a $1000 tax-free contribution from the government, and scheme members are also entitled to a tax credit of up to $20 per week (or up to $1040 per year). This is added directly to your KiwiSaver fund.

New Zealanders aged 18-65 who are not currently working can also contribute to a KiwiSaver scheme. They are eligible to receive the tax credits and the $1000 kick-start sum. To receive the full tax credit you must be contributing at least $20 a week to your scheme. You cannot join KiwiSaver if you are over 65.

Children under 18 can join KiwiSaver and receive the $1000 kick-start, but not the tax credit. Some schemes allow children to make one contribution at the start but do not require further instalments.

Once you have been contributing to KiwiSaver for one year, you can take indefinite "contributions holidays", but you will not continue to receive the tax credits while you are not contributing to your scheme. Your employer is not obliged to contribute to your KiwiSaver scheme if you aren't.

KiwiSaver Fund Access

Most people will not be able to access the funds held in KiwiSaver until they qualify for New Zealand Superannuation (currently age 65), except in special circumstances such as moving overseas permanently or significant financial hardship. You are not taxed on withdrawals. One year after you leave New Zealand permanently you can withdraw your $1000 kick start, your contributions and your employer contributions but you cannot withdraw the tax credits, which are returned to the government.

One-off withdrawals are allowed to help scheme members buy their first homes once they have been contributing to KiwiSaver for three years. First-home buyers who have been contributing to KiwiSaver for three years are also eligible for a subsidy, but this is subject to caps both on income and the purchase price of the house.

Your “nominated persons” can have quick access to up to $15,000 from your KiwiSaver account when you die, without having to wait for probate. Any other funds left in your KiwiSaver account when you die pass to your estate. 

KiwiSaver and New Zealand Tax

Your contributions to KiwiSaver are calculated from your gross (pre-tax) salary. You pay income tax on the portion of your salary that you contribute to your KiwiSaver scheme.

Once you qualify for New Zealand Superannuation (currently at age 65), you can take your KiwiSaver fund as a lump sum with no further income tax to pay.

Keeping Track of your KiwiSaver

You'll get regular updates on your KiwiSaver from your fund manager. You can also track your KiwiSaver transactions via the "Manage My KiwiSaver" facility on the KiwiSaver website, www.kiwisaver.govt.nz.

UK Pensions and KiwiSaver

A number of KiwiSaver schemes have QROPS approved status, and can accept pension transfers from UK pension providers. Please note that KiwiSaver schemes are far more restrictive than other NZ pension schemes, both in terms of when you can access the money and what you can invest it in. We would not normally recommend that a UK migrant lock their transferred pension funds into a KiwiSaver scheme.

Australian Superannuation and KiwiSaver

If you have worked in Australia at any time over the past 20 years or so, you may have an Australian pension. The NZ and Australian governments have announced that you will be able to transfer Australian pensions into New Zealand KiwiSaver schemes from some time in 2011, providing your KiwiSaver scheme is happy to accept the transfer. Access to the Australian part of your KiwiSaver will be the same as if you had left it in Australia - you will be able to withdraw it from the age of 60 if you have permanently retired.

Australian employers are required to pay a generous 9% minimum contribution to employee superannuation funds. You often start a new scheme when you change jobs, so it is easy to lose track of Australian pensions - if you think this may have happened to you, try tracing them via the SuperSeeker facility on the ATO website.

There are benefits and drawbacks to transferring your Aussie Super to New Zealand if you're planning to retire in New Zealand. The obvious benefit of course is that you can consolidate your pensions, which makes them much easier to keep track of. The main drawback is that Australian pension funds pay less tax than KiwiSaver funds on their investment earnings. 

Is KiwiSaver Right for You?

With contributions coming from your employer, you and the government, and the opportunity of investment growth, it is surprising how even quite modest contributions to your KiwiSaver scheme add up. Even if you are not entirely sure whether you'll be retiring in New Zealand, the relative portability of your KiwiSaver (and the opportunity to keep your employer's contributions) make it a good option for most eligible migrants. We think that it is well worth considering opening a KiwiSaver account.

Broadbase International will work with you every step of the way to help you make a confident start to your new life in New Zealand. Please contact us if you have any questions about the financial side of life in New Zealand, and don't forget to order your free copy of our comprehensive New Zealand Guide.