Kiwi Saver explained

Mid-2007 will herald the arrival of the brave new world of 'KiwiSaver'. This is how it will work
From mid-year, we will be able either to opt in or out of the new KiwiSaver savings plan. Participation is voluntary at this point. However, all employees aged over 18 are automatically enrolled when they begin a new job (with a few exemptions). Contributions are at the rate of 4 per cent of gross salary or wages, unless the individual chooses to contribute at the higher rate of 8 per cent. There will be a range of scheme providers. But those people who do not specify one of them will be allocated to a random default option. Savings are aimed at retirement and are locked in until the age of eligibility for NZ Superannuation (NZS) or for five years, whichever is the later, except in cases of financial hardship, permanent emigration or, after a minimum of three years, to contribute toward a deposit on a first home. Employers have the task of enrolling new employees in KiwiSaver and existing employees who choose to opt in. They will deduct employees' contributions and forward them to the IRD with PAYE (like student loans). The Government will make a $1000 contribution to each member's account, to be locked in until the recipient is eligible for NZS or for five years of membership, whichever is the later. They will also make some contribution towards fees. The first home subsidy of $1000 per year of membership, up to a maximum of $5000 for five years, goes to qualifying KiwiSaver members after at least three years of saving. One shortcoming that has not been well considered is that the date of eligibility is locked to NZS qualification. This, currently, is age 65, but may move toward 67 or even 70 in the future. If KiwiSaver is your primary retirement plan, and you aim to retire around 60 or so, you may not have access to your funds just when you need them most ? be aware.