KiwiSaver is a government-supported savings scheme designed to help New Zealanders build a financial cushion for retirement. It’s a voluntary program, but it plays a crucial role in ensuring you have the funds you need for your later years. Here's everything you need to know about how KiwiSaver works:

How to Join KiwiSaver

Automatic Enrolment: If you're starting a new job and are between 18 and 65, your employer will automatically enrol you in KiwiSaver, unless you choose to opt out. If you're under 18, you can join KiwiSaver directly through a provider.

Voluntary Enrollment: If you’re not automatically enrolled, you can join KiwiSaver voluntarily. This applies if you're self-employed, not currently employed, or simply want to join independently. Children and individuals under 18 can also join, subject to specific requirements.

Joining Steps:

• Talk to Your Employer: They will provide a KiwiSaver information pack and a deduction form.

• Contact a Provider: Enroll directly through a KiwiSaver provider.

• Seek Advisory Help: A third-party KiwiSaver advisory can assist you in choosing the best fund for your needs.

Contributing to KiwiSaver

For Employees: Once enrolled, your employer will automatically deduct your chosen contribution rate from your salary and pay it into your KiwiSaver account. You can choose to contribute 3%, 4%, 6%, 8%, or 10% of your income. Employers are required to contribute at least 3% of your gross pay.

For Self-Employed: As a self-employed individual, you manage your own contributions. It’s recommended to make regular voluntary contributions, ideally at least $1,043 per year, to receive the full government contribution of $521 annually.

Voluntary Contributions: You can make additional contributions at any time directly to your KiwiSaver fund or through the IRD. Contact your provider for details on setting this up.

Who Looks After My Funds?

When you first join KiwiSaver, your funds are placed in a default fund managed by one of the government-approved providers. Default funds are usually low-risk and have lower performance, often provided by banks. You can change your KiwiSaver provider and fund at any time. If you're still in a default fund, it's a good idea to review your options to choose an investment strategy that better aligns with your goals and risk tolerance.

How are my Funds Invested?

When you contribute to KiwiSaver, your provider uses that money to invest in various assets like stocks, bonds, and property. The goal is to grow your investment over time. Different providers have different performance levels, so it’s important to choose one that’s competitive and performs well compared to others.

Types of KiwiSaver Funds

• Cash

• Conservative

• Balanced

• Growth

• Aggressive

The type of fund you choose should align with your age, investment timeframe, goals, and risk tolerance. For example, younger members might benefit more from a growth or aggressive fund as they have a longer investment horizon.

Accessing Your KiwiSaver Funds

Retirement: You can access your KiwiSaver savings once you turn 65, providing financial support for your retirement living expenses.

First Home Purchase: If you’re buying your first home, you can withdraw most of your KiwiSaver savings to help with the deposit and purchase costs. You must have been a member for at least three years and meet specific income and property value criteria.

Early Access: In certain cases, such as facing financial difficulties or terminal illness, you might be able to access your funds early. Your provider will review these situations on a case-by-case basis.

In Summary

KiwiSaver is an essential tool for building up savings for retirement, utilising contributions from your employer and the government. It’s super easy to get started and manage, and you’ve got options to tailor your investments to fit your goals. So, whether you’re just starting out or are nearing retirement, KiwiSaver has options to help get your savings working for you.