What is the KiwiSaver Scheme ?

“It is an opportunity every New Zealander under 65 should be taking advantage of, including your Children”…

“Our Objective is simple – to protect and build your Wealth so you can enjoy a better standard of living in retirement”..

…..Don Brash,  former Governor of the NZ Reserve Bank.

KiwiSaver is a Retirement Savings Scheme aimed at helping New Zealanders to ensure they have some savings when they retire, in addition to the Government Pension/ Superannuation.
It is a New Zealand Government scheme that uses Private Investment Fund Managers to perform and manage the investments.
It uses the IRD to collect Employees and Employers contributions.
And it uses Employers to manage the deductions of Employees contributions from their wages.

You can find the official definition here www.kiwisaver.govt.nz

Who Qualifies ?

http://www.kiwisaver.govt.nz/being/who-join/

You simply need to be under 65 and permanently resident in New Zealand to qualify for KiwiSaver.

Concept

The Concept of KiwiSaver is that you save something towards your retirement (2% or more of your salary), your employer matches it (at 2%) & the Government also matches it, ie for every dollar you put in, 2 more are also invested on your behalf( to a limit of 2% of your salary from your employer & $1043 from the Government).
In addition, those saving for a First Home can use some of the retirement savings towards the First Home.

KickStart

In addition, at present the Government is also starting every account with $1000 Kick Start.

How Long are the funds locked away for ?

The aim is that you contribute until you retire, and the funds stay in the account until you reach age 65.

There are allowances for withdrawal prior to age 65:

At 65 you can withdraw them Tax Free, as the Funds have paid tax on their returns on your behalf, at your tax rate during the investment period. 
Your Employer contributions and the Government Contributions are also Tax Free (on both deposit and withdrawal).
Many investments are PIE's (Portfolio Investment Entity) which can be the most tax effective for NZ & Australian investments.
Other schemes may be "Widely-held Superannuation Funds"

Can I stop paying ?

There are allowances to take a "Contribution Holiday", typically after you have belonged to KiwiSaver for over 1 year.

First Home Subsidy

http://www.kiwisaver.govt.nz/benefits/benefits/#06

If you are saving for your first home (or you are in the same financial position as a first home buyer) there is also a first home subsidy of $3000 to $5000 depending upon how long you have belonged to KiwiSaver (3 - 5 years)

Click here "HOW MUCH" to see how the Deposit and subsidy can be used with the Welcome Home Loan.

Employees , Self Employed and Non/ Un Employed

There are slightly different rules for those self employed than for employees, so click on the links to see more detail about each type.

Employed   Self Employed  Unemployed  Non-Employed  Under 18   60 to 65

Risk of Investment

KiwiSaver Providers are independent companies, such as the big banks and financial service providers (AMP, ASB, AXA, ING, Mercer,Tower etc) plus other specialist Investment Companies.

NONE are Government Guaranteed !

Most KiwiSaver plans have  a choice of 3 funds into which you can invest:

What Type of Investment ?

Most plans are "Unit" based, with units starting at $1 as at the beginning of the scheme in July 2007. (Many other companies plan units are currently valued at less than $1 & some are higher. )

So as the unit price goes up & down, how many units you can purchase for your weekly (eg $20)or monthly contribution will also vary.

If they are cheap today when you buy them, but grow in value tomorrow then you have automatically made money, if tomorrow is when you want to cash them in.

Conversely if the price is high today & they drop in value tomorrow, and tomorrow is when you want to cash them in, then you will loose money on them. So in that case the option is to hold onto them until they grow higher than your purchase price.

Over time, since you will be buying units at different times, and hence different prices, the process called "Dollar Cost Averaging" is often used to try to work out the average  price you have paid for your units.
Also over time, the amount of the rise in value of the units, is determined by the fund managers performance for each of the funds.

Returns Calculator

See what returns you can expect from your KiwiSaver by 

clicking on the menu buttons to the left. Within each category is an interactive calculator that demonstrates how KiwiSaver works over 5 years.

Frequently asked Questions
 

Department of Labour Fact Sheet

How much do I need by the time I retire ?

If you have a mortgage free home
by the time you retire, you might feel comfortable with $160,000 in the bank.

If you are still renting,
you could need over $450,000 in the bank
to be able to pay the rent and still feel comfortable.

Click Here to visit the "How much I need when I Retire" page

The Retirement calculator on the Sorted site can give you a better idea of your requirements.

http://www.sorted.org.nz/calculators/quick-retirement/page1.php

Do You have Goals ?

If you are serious about saving for a house KiwiSaver is a very effective way to do it.

If you are serious about being able to survive in retirement, KiwiSaver is a very effective way to do it.

Ready to Sign up ?

Don't Delay - Every week you wait could be costing you over $40
($20pw from Employer, $20pw from Government Matching Contributions , plus $1000 Kick Start)

You need a full Investment Statement

You need to read it and understand it before signing it.
Information on this site should help you understand how KiwiSaver affects you,
but it is the Investment statement that has all the legal conditions and financial details,
and the Investment statement will always overrule whatever might be posted on this site.

kwilliams @free . net . nz

Sign up to KiwiSaver Today

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              & look at all the Benefits

                   you get for just $20pw