KiwiSaver is a voluntary saving scheme started by the government to assist New Zealanders to save up for their first home purchase and for the purpose of retirement.

Those enrolled in the KiwiSaver scheme can opt to choose to contribute either 3%, 4%, 6%, 8%, or 10% of their gross wage or salary into their account. This must also be matched by their employers – at a minimum of at least 3 percent of gross salary. You also have the option of making voluntary contributions too.

Furthermore, your contributions are also bolstered by an annual government contribution of up to $521 dollars per year, of which you will receive the maximum as long as you have contributed a minimum of $1042.86 yourself and are 18 years or over.

These contributions combined are then placed into a KiwiSaver fund which is chosen by the member. Funds are made up of things like cash, bonds/fixed interest, shares and property – the ratio of which is dependent on how risk adverse you are and what your time horizon is. This is where an adviser can be useful, by providing guidance as to what fund best suits your individual personalised needs.

In addition to saving for retirement, KiwiSaver can also be used in purchasing a first home by making a withdrawal from your fund, so long as you have been a member for a minimum of three years. However, bear in mind that members will not be able to withdraw all funds from their KiwiSaver – as a $1000 dollar balance must remain in their account post withdrawal.

The individual KiwiSaver schemes that you contribute to invests your contributions, so you earn money / a return for your KiwiSaver. You pay tax on the money your investment earns via a Prescribed Investor Rate. This PIR is a tax rate. It’s based on your total taxable income in the last two income years (1 April to 31 March), for example income from salary, wages and any other income. The different rates are, 10.5%, 17.5% and 28%.

If you are experiencing financial difficulties, you may also be able to withdraw from your KiwiSaver fund early. Significant financial hardship includes when you cannot afford to meet the bare minimum of living expenses or for example you are unable to pay your mortgage on your property, and your lender is attempting to enforce the loan. These are examples of when an early withdrawal may be made but there are others too, the key words to remember is ‘Significant Financial Hardship’. KiwiSaver wasn’t designed to simply pay off some consumer debts. An adviser can help you through this process.

Being a Kiwisaver contributor also allows you access to a First Home Grant that may be applied for by individuals. However, there are some requirements/criteria that must first be met. A few important ones are, the individual must have been contributing for at least the minimum amount to KiwiSaver for 3 years or more, purchase a property that is within the regional house price caps and agree to live in the house purchased for at least 6 months. A first home grant is a good way to boost your first home deposit (eligible first-time homebuyers up to $5,000 for individuals and up to $10,000 for a couple).

Some KiwiSaver providers also offer Certified Socially Responsible Funds to their clients. Socially Responsible Investment funds typically exclude investments in businesses where the underlying activities are principally involved in the tobacco, alcohol, gambling, armaments, nuclear power, adult entertainment, GMO and fossil fuel industries. In addition to this, there are also some providers that actively research and invest into businesses that are deemed socially responsible (as well as exclude ones that aren’t).

We are experienced financial advisors who operate in a professional and timely manner to serve our valued clients. Make the most out of your KiwiSaver contributions.

Interested in working with The Nimbus Project? To obtain the best KiwiSaver advice, send us an email or make an appointment with one of our experts.