KiwiSaver: You can't take it all with you

Check your KiwiSaver before you head overseas. Photo / Thinkstock

Q: Is someone who is enrolled in KiwiSaver and is studying overseas entitled to the Government tax credit of $521.43 each year if making a minimum voluntary contribution of $1,042.86? If moving overseas permanently, can he or she take the Kiwisaver funds, including the $1,000 kick-start and the member tax credits?

A: With many Kiwis heading overseas — last month, 5,000 left for an extended period or permanently — it's good to check what happens to your KiwiSaver.

Joe Bishop, head of retail and marketing at Gareth Morgan Investments, said the $1,042.86 wasn't the minimum voluntary contributions people could make. It was the amount an eligible member of KiwiSaver must contribute to receive the maximum annual member tax credits of $521.43 from the Government.

"It works out to be a 50-cent-in-the-dollar match and voluntary contributions can be made through your KiwiSaver provider or to IRD.

"New Zealand residents generally contribute through their employer, but if it's less than $1,042.86 annually — the KiwiSaver 'year' runs from July 1 to June 31 — you can make a top-up payment to make sure you receive the full member tax credit.

"A person studying overseas won't be eligible for member tax credits, even if they make voluntary contributions," said Bishop.

"There are few situations where members of KiwiSaver who are abroad receive member tax credits. These involve working either as a Government employee serving outside New Zealand, or as a volunteer, or for a token payment for a specified charitable organisation, relieving poverty, hunger or sickness.

"An overseas student who doesn't meet these criteria won't be eligible for member tax credits.

"If you move to a country other than Australia, you can apply to withdraw your KiwiSaver funds and close your account one year after you've permanently emigrated.

"You can withdraw everything except for member tax credits you received, so you can take all your contributions, your employer contributions, any investment income and the $1,000 kick-start.

"If you are moving permanently to Australia, you cannot withdraw your KiwiSaver funds early. Instead, you can choose to either leave your funds in a KiwiSaver scheme account in New Zealand or transfer them, including member tax credits, to an Australian superannuation scheme.

"You won't have to wait a year like you do when moving to another country," said Bishop.

At the time of writing, only a handful of Australian superannuation providers accepted KiwiSaver transfers.