Frequently asked questions

A. Benefits

1. How do I claim my member tax credit?
2. Why do I need to wait until 1 April 2011 for the compulsory employer contribution to reach 4 per cent of my gross salary?
3. Will I be able to get the member tax credit and compulsory employer contributions if I am contributing to a non-KiwiSaver scheme?
4. What is the amount of the fee subsidy that is being provided?
5. Being a self-employed person what do I get out of the Budget 2007 announcements?

B. Participation

1. Are the same people still allowed to participate in KiwiSaver under the Budget 2007 changes?
2. What do I have to do, and when?
3. Can I join KiwiSaver in addition to my current scheme? If so, can I get the member tax credit and the compulsory employer contributions twice?

C. Contributions

1. How have the Budget 2007 announcements changed the rules for my own contributions to KiwiSaver and my employer's contributions?
2. Do compulsory employer contributions count towards my minimum contribution requirement?
3. With my current super scheme I get an employer contribution above 4 per cent of my salary. Is this going to be cut back (e.g. to 1 per cent in from 1 April 2008)?

D. Withdrawals

1. When will I be able to withdraw money from my KiwiSaver account? How has this changed under the Budget 2007 announcements?

A. Benefits

How do I claim my member tax credit?

Your KiwiSaver scheme provider (or complying superannuation fund provider) will make an annual claim to Inland Revenue on your behalf, based on the information it holds of the contributions you have made. Upon receipt of the member tax credit your provider will credit the amount to your KiwiSaver account (or complying superannuation fund).

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Why do I need to wait until 1 April 2011 for the compulsory employer contribution to reach 4 per cent of my gross salary?

To help manage the cost to employers of compulsory matching contributions, particularly for those that are not currently offering work place superannuation schemes, the government has proposed that the compulsory matching contributions will be phased in over four years.

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Will I be able to get the member tax credit and compulsory employer contributions if I am contributing to a non-KiwiSaver scheme?

It depends. In order to get the tax credit and the proposed compulsory employer contributions, your contributions will have to be made to what is known as a 'complying superannuation fund'. A complying superannuation fund is a section within a registered superannuation scheme that has been approved by the Government Actuary as having met certain criteria similar to KiwiSaver (e.g., KiwiSaver lock-in rules and portability). Ask your superannuation provider if you are unsure whether your scheme is a complying superannuation fund.

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What is the amount of the fee subsidy that is being provided?

The fee subsidy has been set at $40 per member per year, and will be paid six-monthly into a member's account, with the first payment made on the date on which the $1,000 KiwiSaver kickstart is paid (that is, three months after Inland Revenue receives the first contribution for a person). The amount of the fee subsidy may change in the future.

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Being a self-employed person what do I get out of the Budget 2007 announcements?

If you are aged less than the New Zealand superannuation qualifying age you will be able to join KiwiSaver by contracting directly with a KiwiSaver scheme provider. You will receive the $1,000 kickstart and an ongoing fee subsidy of $40 per year. If you meet the qualifying criteria your personal contributions will also be matched by a tax credit up to a maximum $20 per week (about $1,040 per year) that will be paid directly into your KiwiSaver account. After three years of saving you may be eligible for the first home deposit subsidy.

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B. Participation

Are the same people still allowed to participate in KiwiSaver under the Budget 2007 changes?

KiwiSaver remains voluntary. Eligibility to participate in KiwiSaver has not changed under the Budget 2007 announcements.

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What do I have to do, and when?

The KiwiSaver enrolment process and timing has not changed as a result of the Budget 2007 announcements. Full details are available at www.kiwisaver.govt.nz

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Can I join KiwiSaver in addition to my current scheme? If so, can I get the member tax credit and the compulsory employer contributions twice?

You can join KiwiSaver as well as be a member of another superannuation scheme. However, you can only get the member tax credit once (up to the cap) on contributions made to a KiwiSaver scheme or a 'complying' superannuation fund (i.e., a superannuation fund that has a section with KiwiSaver-like terms and conditions. If you contribute to more than one scheme your tax credit contributions will be split across those schemes). If your employer is contributing to your current superannuation scheme, then these contributions may count towards the proposed compulsory employer matching contributions, in which case they may not be required (based on the current proposal) to make matching contributions to your KiwiSaver scheme as well, if various criteria are met.

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C. Contributions

How have the Budget 2007 announcements changed the rules for my own contributions to KiwiSaver and my employer's contributions?

From 1 April 2008, it is proposed that contributions by employers will become compulsory to the extent that an employee contributes to KiwiSaver (this is proposed to be phased in from 1 April 2008 to 4 per cent of gross salary by 1 April 2011). It has also been proposed that employer contributions will no longer count towards an employee's minimum 4 per cent KiwiSaver contribution (transitional arrangements apply - see below).

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Do compulsory employer contributions count towards my minimum contribution requirement?

From 1 April 2008, it is proposed that employer contributions will no longer count towards an employee's minimum KiwiSaver contribution rate of 4 per cent of gross salary. Transitional arrangements have been proposed for those employees who join prior to 1 April 2008 and have agreed with their employer to have employer contributions to count towards the minimum contribution rate.

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With my current super scheme I get an employer contribution above 4 per cent of my salary. Is this going to be cut back (e.g. to 1 per cent in from 1 April 2008)?

Your employer can continue contributing at this higher level to your existing superannuation scheme, but many employers may choose to review their superannuation arrangements as a result of all the changes proposed. You will need to ask your employer what it plans to do.

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D. Withdrawals

When will I be able to withdraw money from my KiwiSaver account? How has this changed under the Budget 2007 announcements?

Following the Budget 2007 announcements there are new rules about when you can and can't withdraw the member tax credits you have accumulated.

You will be able to withdraw all funds (including the $1,000 kickstart and member tax credits) from your KiwiSaver account when you reach the age of eligibility for New Zealand Superannuation, of after five years of membership, whichever is the later.

You will be able to withdraw all your own contributions, any vested employer contributions and your member tax credits in the event of serious illness.

You will be able to withdraw all your own contributions and any vested employer contributions (but not the member tax credit) if you:

• Permanently emigrate (in which case you can also withdraw the $1,000 kickstart contribution);
• Suffer significant financial hardship; or
• Wish to make a deposit on your first home.

In addition, the member tax credit will not be able to be withdrawn under mortgage diversion or for making a deposit on your first home (nor do they count towards entitlement to the member tax credit).

The KiwiSaver Act sets out a number of conditions and qualifying criteria that you will need to meet to be entitled to withdraw in each case.

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