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How does KiwiSaver work?

How does KiwiSaver work?

In order to assist you with your long-term saving for retirement, a voluntary, work-based savings intiative called KiwiSaver has been designed. It is essentially hassle-free, so that maintaining a regular savings pattern is easy.

A wide range of membership benefits are available in order to encourage you to start saving. Regular contributions from your employer are included as well as annual member tax credit paid by the Government. Selected people are also eligible for help with the deposit on their first home.

How to make contributions

For majority of the users, KiwiSaver will be work-based. This means that your employer will inform you about KiwiSaver, and your contributions will come directly out of your pay check. Once you have chosen to join, you are able to choose a KiwiSaver scheme rate of either 3%, 4% or 8%. Contributions will be deducted from your pay according to the rate you selected.

If you are either self-employed, or un-employed, you can discuss with your KiwiSaver provider and agree upon an amount that you will pay directly to them each month.

KiwiSaver Providers:

Private sector companies called KiwiSaver providers manage certain KiwiSaver schemes. Which KiwiSaver provider you invest your money with is entirely up to you. Your investment choices in a KiwiSaver scheme are at your own risk. KiwiSaver is not guaranteed by the government. See a list of some well know providers below;

  • AMP

  • ANZ

  • BNZ

  • Westpac

Although all of the above mentioned KiwiSaver providers may offer their own slightly customised KiwiSaver schemes, KiwiSaver works the same way for all customers.

How KiwiSaver Works:

  • If you’re automatically enrolled, you are able to ‘opt out’, but only between 2 and 8 weeks of starting the job. Once you have joined, you have to contribute for at least 12 months.
  • You may choose to join KiwiSaver at any time, although, once you do, you can’t opt out.
  • As the employee, you can choose whether you want to contribute either 3%, 4% or 8% of our gross (before-tax) wage or salary, towards your KiwiSaver account.
  • After contributing towards your KiwiSaver for 12 months, you can take a break from saving (called a ‘contributions holiday’) or carry on.

You can make voluntary contributions such as lump sums or regular automatic payments one you have joined. You can pay this either directly to the KiwiSaver provider or through Inland Revenue.

Who can join KiwiSaver?

  • a New Zealand citizen, or someone who is entitled to live in New Zealand indefinitely
  • People who normally live in New Zealand (with some exceptions)
  • Anyone below the age of eligibility for New Zealand Super, which is currently 65

You can also be:

  • Employed
  • Self-employed
  • Unemployed
  • Under 18

How can i Join KiwiSaver?

The three ways to join KiwiSaver include;

  • Automatic enrolment when you start at a new job
  • Opting in through your current employed
  • Using a KiwiSaver Provider to opt in through

KiwiSaver Benefits:

There are many great benefits to signing up with KiwiSaver and they may leave you wondering “well, why wouldn’t i sign up?”

  • Your contribution is deducted from your pay before we see it. This makes saving easier.
  • On top of your own contributions, your employer has to contribute ant least 3% of our gross wage or salary into your KiwiSaver account.
  • If you are a contributing member ages 18 or up, the government pays into your KiwiSaver account as well. This is annual ‘member tax credit’ and may be up to $521.
  • Not only can you save for retirement, but you can use KiwiSaver to help you buy your first home through the KiwiSaver HomeStart grant and home purchase withdrawal.
  • Your KiwiSaver account moves with you according to whether you change jobs or leave the work force.