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What is KiwiSaver?

KiwiSaver is a national initiative that commenced on 1 July 2001 to promote long term retirement savings. It is not intended to supersede existing superannuation arrangements, but to provide a vehicle for all employees to be able to save by way of direct deduction from their salary or wages. It is also open to most people who aren't employed. KiwiSaver schemes are managed independently of the Government by investment providers such as FANZ.

 

The KiwiSaver legislation applies to most employees who are New Zealand citizens, or entitled to be in New Zealand indefinitely under the Immigration Act 1987. If an employer pays employees based in New Zealand through the PAYE system, they must usually enrol those who start a new job in KiwiSaver and will have to make deductions from their gross salary and wages and pay these to the IRD, beginning on their first pay run. An employee who is enrolled but does not want to be a KiwiSaver can opt out in a set period after starting the new job. A person who wishes to join KiwiSaver but doesn't start a new job can also join.

KiwiSaver changes included in the Taxation (Urgent Measures and Annual Rates) Bill were passed on 11 December 2008. The main changes to KiwiSaver took effect on 1 April 2009:

  • Members are able to choose to contribute either 2%, 4% or 8%.
  • The member default contribution rate reduced from 4% to 2%.
  • Compulsory employer contributions are capped at 2% rather than increasing to 3% and 4% in subsequent years.
  • The employer tax credit discontinued.
  • The tax exemption on employer contributions are capped at 2% of an employees salary or wages. Currently, employer contributions are tax-free up to 4% if matched by an employee contribution.
  • The $40 member fee subsidy discontinued, subject to some transitional rules for members who joined before 1 April 2009.

To find out more about the how FANZ and KiwiSaver might work for you, read our KiwiSaver FAQ page, the attached FANZ KiwiSaver Investment Statement (PDF 483KB), refer to the Government's KiwiSaver website, refer to the Retirement Commission's Sorted website, or contact us for advice on how to get started.