KEY POINTS:
Q. Am I entitled to join a KiwiSaver scheme?
A. From today all New Zealanders aged 18 and over or under 65 starting a new job will be automatically enrolled in KiwiSaver, with some exceptions. If you do not wish to join, you can opt out between week two and eight of starting a new job by telling your employer, or Inland Revenue. Existing employees will not be automatically enrolled but can join at any time. If you are self employed or not in paid employment, you can join but you will pay your contributions directly to your chosen scheme. You cannot join if you have reached the age of eligibility for NZ Super (age 65) or do not meet the citizenship and residency requirements. People who hold temporary, visitor or student permits cannot be members.
Q. Can I join KiwiSaver if I am self employed or not currently in paid employment?
A. If you are self employed or not working, you may choose to join KiwiSaver. You will need to contact your chosen scheme provider and will be eligible for the $1,000 Government kick-start contribution, the $40 per year fee subsidy and member tax credits, subject to eligibility.
Q. How much do I need to contribute to KiwiSaver as an employee?
A. As an employee, the minimum contribution is 4 per cent of your gross salary or wages. You can choose to contribute at the higher rate of 8 per cent. Your employer will deduct contributions from your take-home (net) pay and forward this to Inland Revenue at the same time as PAYE deductions. Your contributions will then be passed on by the IRD to your KiwiSaver scheme.
Q. Is my employer required to contribute to my scheme?
A. From April 1, 2008, your employer will have to make a compulsory contribution when you are contributing to KiwiSaver from your salary or wages, subject to eligibility. This will start at 1 per cent of your gross salary or wages and increase by 1 per cent each year to reach 4 per cent by April 1, 2011.
Q. Will I be able to get my money out of KiwiSaver and can I stop payments?
A. Savings in a scheme are locked in until the age of eligibility for NZ Super or for five years from joining, whichever is later. The withdrawal of funds is only allowed in limited circumstances such as permanent emigration, significant financial hardship, serious illness or for a first home purchase. Depending on the type of withdrawal, this may exclude the Government kick-start and member tax credits. If you are a new employee automatically enrolled you can opt out between week two and eight of starting employment. If you are an employee who joins KiwiSaver you must contribute for at least 12 months, after which you can take a "contribution holiday", which allows you to put contributions on hold for a period of between three months and five years.
Q. What is meant by the term "managed fund" in relation to Kiwisaver?
A. This is a pool of money from many investors that is invested (managed) by specialist fund managers. Due to their scale, managed funds can often be invested in more areas than a single investor would have access to.
Q. What rate of return am I likely to get on my KiwiSaver scheme?
A. As the schemes are yet to start, there are no historical performance figures available. It is important that you are aware historical performance and forecasts of future performance are not a guarantee of how an investment fund will perform. The value of investments can rise and fall depending on market conditions. The value of investments in the fund depends on the performance of the underlying assets into which the fund invests. As an investor, you may experience short-term losses but you should look to choose an investment fund that suits your needs best to reach your retirement savings goal.
* Sourced from: www.asb.co.nz/kiwisaver/
