KEY POINTS:
The Government next week launches a KiwiSaver publicity blitz aimed at workers.
A similar campaign informing companies about Budget changes to the scheme starts in a few weeks.
There is clearly a thirst among Herald readers for more details about the overhauled scheme, which now requires employers to contribute money and includes a subsidy from the Government. A selection of questions - and the answers:
I've got kids aged 7 and 10. Should we enrol them and what would we have to pay each week to keep it going? What would they get from the taxpayer? How would we enrol them - through their existing bank accounts? When would they be eligible to cash in?
Any legal resident of New Zealand who is entitled to be here indefinitely and is under the age of eligibility for NZ super (currently 65) can legally open a KiwiSaver account.
However, KiwiSaver schemes will be operated by private sector firms who may choose to set minimum contribution rates. Six providers have been designated "default providers" and have to enrol anyone who is allocated to them between the ages of 18 and 64 inclusive, but they do not have to enrol children.
If you can find a scheme that is willing to enrol your children, they will get the $1000 Government "kick-start". But they will not get the annual subsidy of 4 per cent of contributions up to $20 a week - this will be paid only for adults aged 18 to 64.
You would need to enrol them by approaching a KiwiSaver provider listed on the Ministry of Economic Development's Insurance and Superannuation Unit website(see below).
All the banks have tie-ups with KiwiSaver providers so you could also ask your bank.
All money in KiwiSaver accounts is locked up until the qualifying age for NZ super or for five years, whichever is later, with exceptions for a deposit on a first home, emigration, serious illness or financial hardship.
Is there a maximum contribution I can make?
You can contribute either 4 per cent or 8 per cent of your income through your employer. You can also make extra contributions, either as regular automatic payments or as occasional lump sums, through Inland Revenue or directly to your KiwiSaver provider. There is no upper limit on these.
What will happen if you are already in a super fund? Can you have both going or will they just turn into one type of super fund? In that case will you still get all the benefits, including the $1000, when you start KiwiSaver?
Every existing super fund will have to decide whether to modify its rules so that part or all of the scheme complies with KiwiSaver rules such as portability and locking in the money to 65.
You get the $1000 Government "kick-start" only if the whole scheme becomes a KiwiSaver scheme. In practice, since changing the rules requires 100 per cent approval, this would only be likely if the current scheme is wound up and replaced by a KiwiSaver scheme.
However, you do get the annual subsidy of up to $20 a week if your scheme modifies its rules to become KiwiSaver-compliant. This is likely to involve providing a new option where you can choose to place 4 per cent of your contributions and a matching 4 per cent from your employer under KiwiSaver rules, keeping the rest of your money under the scheme's current rules.
How will "first-home buyers" be defined? My partner owns a property and I contribute to the mortgage but my name is not on the title. I am planning to buy a place of my own in future - can I still be counted as a first home owner?
Housing NZ says these details have not been decided yet but are likely to follow the precedent of Welcome Home loans, which are also for first-home buyers only. These allow a "second chance" for people who have owned joint matrimonial homes and have divorced.
In the case of this questioner, as she does not legally own the property for which she is helping to pay the mortgage, she will almost certainly be considered a first-home buyer when she eventually buys her own home - provided that she intends to live in it.
Is KiwiSaver part of the matrimonial property assets to be split?
Yes.
After five years or reaching 65, do we get our money in a lump sum tax-free?
KiwiSaver providers will offer options for getting your money back either as a lump sum or as an annuity (pension). Either way, you will have paid tax on it already so the final payout will be tax-free.
Is KiwiSaver part of your funds on bankruptcy? If so, can claimants take their demands before a bankrupt reaches 65?
Yes, and yes. You can lose your KiwiSaver nest-egg if you go bankrupt. This is a deliberate decision to stop people salting money away in KiwiSaver before going bankrupt.
