The KiwiSaver option for employees

KiwiSaver is a voluntary savings scheme launched in July 2007. Its operation is based around employers deducting money from employees’ wages as retirement savings. 

From 1 July 2007, employees aged 18-65 years are automatically enrolled in KiwiSaver when they start a new job (existing employees can opt-in if they wish)

As an employee you can contribute either 4% or 8% of your gross pay – you decide.

Deductions start from the first pay and are deducted with PAYE and paid to IRD

IRD then passes the money to a private company (called a provider) to invest:

• employees can select their own provider from those who hold registered KiwiSaver schemes
• and / or employers can choose a provider for their employees
• if neither the employee nor the employer selects a provider, the IRD assigns one of the six providers listed on a panel of default provider

• If you are a new employee, you can opt out of KiwiSaver between weeks two and eight of your new job;
• if you've been an employee of your company since before KiwiSaver was launched, ten you can enroll through your HR department

 When you initially join KiwiSaver, you get:

• a government kick-start of $1,000;
  • a scheme fee subsidy of $40 per year to your account, paid by the Goverment;
  • a member tax credit matching the contributions you've made that year, up to a maximum of $1,042, paid by the Goverment;
  • from 1 April 2008, a manditory employers match savers contribution of up to 4% (this will be phased in aon a slideing scale over four years.)

• Funds (including the Government kick-start of $1,000) can only be accessed at the age of eligibility for New Zealand Superannuation (currently 65) or five years after the first contribution, whichever happens last.
  
  Note: access to funds are permitted in special circumstances – for significant financial hardship, permanent emigration or serious illness
  
• After a minimum of three years of KiwiSaver membership, savers can withdraw their contributions to buy their first home (excluding the kick-start). The Government will also contribute $1000 for every year of saving, up to $5000. Savers must meet certain criteria to be eligible;
• Savers can divert half of their contributions to their mortgage after they have been saving for 12 months (if this option is offered by their KiwiSaver provider);
• Savers can take a contributions holiday for up to five years after they have contributed to KiwiSaver for 12 months