The Ultimate Beginners Guide To KiwiSaver

Wondering how KiwiSaver works? You’re not alone. Here are the answers to some of the most common KiwiSaver questions.

What are the main benefits of KiwiSaver?

• KiwiSaver is a voluntary savings plan designed to help New Zealanders save for their retirement.
• You can also use your KiwiSaver towards purchasing your first home. It’s an excellent way to build your deposit and keep it locked away safely. 
• If you’ve been a KiwiSaver member for three years and fit the criteria, you may also qualify for a KiwiSaver First Home Grant – up to $5,000 for existing properties or up to $10,000 for new properties.
• Your employer must contribute at least 3% of your gross (before tax) salary or wage into your KiwiSaver account. Think of it as a 3% pay rise – and all you have to do is contribute at least 3% yourself. You can set your personal contribution rate at 3%, 4%, 8%, or 10% of your earnings.
• As well as your employee/employer contributions, you can also receive an annual Government Contribution of $521.43 into your KiwiSaver if you contribute a minimum of $1042.86 per year ($20.05 per week of your contributions). If you’re part of KiwiSaver for a lifetime, that’s close to $36,000! (Applicable between ages 18 and 64).
• If you’re self-employed, we recommend contributing at least the minimum weekly amount above – $20.05 – to get your annual Government Contribution.

How do I get the KiwiSaver government contributions?

• To receive the full KiwiSaver Government Contribution each KiwiSaver year (1 July to 30 June), you need to contribute at least $1,043, which equals around $20 per week.
• If you earn $35,000 or more and contribute 3% or more, you will automatically reach the total amount.
• If you earn less than $35,000, are self-employed, or don’t regularly contribute to your fund, you will need to top up your KiwiSaver to receive the $521.43 from the government.

Does the government hold my money?

• No. Your KiwiSaver account belongs to you – it’s your money, in your name.
• KiwiSaver accounts are set up as investment funds. The government only facilitates the savings process through Inland Revenue, ensuring all your contributions (and any employer contributions) go into your account.
• We work with New Zealand’s top KiwiSaver providers to give you the best possible investment options. 

Where does my money go when I contribute?

• Your money goes directly into your KiwiSaver account, which is part of a bigger fund. This fund is managed by a private provider who invests your money in shares, cash, fixed interest, and property.
• When you set up your KiwiSaver, you choose your fund. If you don’t choose, you will go into a default fund with one of the default providers (one of nine). You can change your KiwiSaver fund at any time.
• The way your money is invested will depend on your fund type: conservative, balanced, growth, or aggressive.

What if a KiwiSaver provider goes out of business?

• KiwiSaver funds are set up as trusts to keep your money secure. If a KiwiSaver provider’s business failed, your investments would not be affected.

How come I don’t see my KiwiSaver money right away?

• It can take up to two months for your contributions to reach your KiwiSaver account. Your employer directs them to Inland Revenue, who then checks that everything is correct. They then transfers the funds to your provider, along with any interest earned during that time.

Could I lose my money?

• KiwiSaver funds are set up and designed to keep growing – it would be very difficult (near impossible) to lose all of your money in KiwiSaver.
• Because KiwiSaver is essentially an investment fund, it is normal for it to fluctuate in value. Remember to zoom out and remind yourself you're playing the long game.

This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.