You may have seen in the media that there are some changes coming for KiwiSaver.
Recently passed by the Government, these will start to take effect from 1 April 2019.
Below we summarise these for you.
New contribution rates of 6% and 10% will now be included. For some the gap between, 4% and 8% was too large and for others who wanted to further increase their savings, this will be a welcomed change.
If you want to alter your contribution rate, please speak directly to your employer and they can assist you.
At times you need to take a break from your savings due to other commitments. Under the new legislation, contribution holidays has been renamed to Savings Suspension and the length of time reduced from five years down to one year although you can reapply through the Inland Revenue should you want to take another Saving Suspension period.
If you are currently on a Savings Suspension, your term of up to five years will continue but thereafter you can only renew for one year.
If you want to restart your contributions you should speak with your employer.
If you want to apply for a Savings Suspension, you should speak with the Inland Revenue Department.
Member tax credit has always been a confusing name for what is a Government Contribution so this name change in the legislation is welcomed. You can find out more information about Government Contributions here.
Whilst KiwiSaver has always been positioned as a retirement savings account, with changing work patterns and increased longevity, KiwiSaver may represent an opportunity to continue saving and investing after 65. The change in the law will allow people over this age to now enrol in a KiwiSaver scheme providing alternative investment options coupled with the ability to withdraw their money without being locked in.
Five year lock in for over 60’s who are new to KiwiSaver
Aligned with the above change for over 65’s, the legislation removes the five year lock in period enabling members who join after 1 July 2019 at age 60 or over that they will have access to their funds at retirement where as previously they would have had to be in KiwiSaver for five years.
Removal of lock in for existing members of KiwiSaver
The changes above are further extended to capture those who joined at aged 60 or over, prior to 1 July 2019, to opt out of the five year lock-in period by making a withdrawal from their KiwiSaver account once they turn 65. One important point to note is that should a member choose this option, they will no longer be eligible for employer or Government contributions.