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How does KiwiSaver work?


KiwiSaver can help you save for retirement or buy your first home. Let’s take a closer look at what it is and how it works.

What is KiwiSaver?

KiwiSaver is a voluntary savings scheme created by the New Zealand Government in 2007. It aims to set Kiwis up with enough money to retire comfortably.   

To be eligible for KiwiSaver, you need to:

  • live, or normally live, in New Zealand and

  • be a New Zealand citizen or be entitled to stay in New Zealand indefinitely.

How to join KiwiSaver

It’s common to join KiwiSaver when starting a new job. Your employer should give you a KiwiSaver deduction form, which lets you opt-in. You can also download a form yourself from Inland Revenue.

If you’re under 18, or if you don’t have an employer, you can still join KiwiSaver directly through a KiwiSaver provider

A KiwiSaver provider is an investment manager (like Sharesies) that’s been approved to offer a KiwiSaver scheme (like the Sharesies KiwiSaver Scheme). 

Choosing a KiwiSaver scheme

You’ve got the freedom to choose which KiwiSaver scheme you join. Before deciding on a scheme, do your homework on it, and read its product disclosure statement (PDS). The PDS will tell you about the scheme’s funds, risks and returns, and fees.

If you don’t choose a scheme, there are two ways that one might be chosen for you:

  • your employer might have a preferred scheme, which you’ll join automatically

  • you’ll be assigned to a scheme from a default KiwiSaver provider.

You don’t have to stay with one scheme forever. You can switch to a different provider at any time, and the providers will take care of transferring your KiwiSaver balance for you. 

Contributions to your KiwiSaver account

Once you’ve joined a scheme, contributions are made from:

  • you—your choice of 3%, 4%, 6%, 8%, or 10% of your pay

  • your employer—another 3% of your salary

  • the government—up to $521.43 every year that you’ve contributed at least $1,042.86.

You can also make voluntary contributions through either your KiwiSaver provider or online banking.

Contributions from your salary and employer go to Inland Revenue first, and are then passed to your KiwiSaver provider.

How your money is invested

KiwiSaver schemes invest your money in investment funds—like the managed funds you would’ve seen on Sharesies. 

Your money is pooled together with money from other members of your scheme, and could be invested in shares, bonds, bank deposits, and more. If the investments make positive returns, your KiwiSaver balance may go up. If the returns are negative, it may go down.

These funds tend to be diversified, but they’re still affected by the usual ups and downs of investing—which is why your KiwiSaver balance might go down as well as up (unlike the savings in a bank account). The scheme’s PDS can help you better understand a fund’s risks.

Types of KiwiSaver funds

KiwiSaver funds typically fall into one of three categories based on risk

  • conservative funds—these invest in lower risk investments like bonds and cash

  • balanced funds—these invest in a mix of higher and lower risk investments

  • growth funds—these invest in higher risk investments, which tend to fluctuate more in value and offer the possibility of higher returns.

Withdrawing your KiwiSaver balance

You can withdraw your KiwiSaver balance once you turn 65, or to buy your first home. There’s also a few other cases, like if you’re:

  • moving to Australia permanently (you can transfer it to an Australian super provider)

  • moving to another country permanently (you can withdraw it completely)

  • going through significant financial hardship

  • experiencing a serious illness or life-shortening condition

  • bankrupt.

Inland Revenue has more info about accessing your KiwiSaver balance for retirement or for an early withdrawal.

Keep looking to the future

As with any investment, it’s worth reviewing your KiwiSaver account every now and again, and checking that your scheme and provider are still meeting your needs—or the needs of future you.

After all, KiwiSaver is about making sure that you can retire in comfort when your working years are behind you. 😎

Ok, now for the legal bit

Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.

Sharesies Investment Management Limited is the issuer of the Sharesies KiwiSaver Scheme. The product disclosure statement (PDS) for the Sharesies KiwiSaver Scheme has been lodged, and may be viewed on the Disclose Register or on our documents page.

Join the KiwiSaver scheme that’s more you

Portfolio displayed is a guide, not from a real customer. For informational purposes only.
A young woman looking off to the side holds a lime-green electric guitar. Superimposed next to her is an iPhone showing a screen in the Sharesies app. The screen shows a KiwiSaver investment portfolio, made up of the Pathfinder Ethical Growth Fund, the Smartshares NZ Top 50 Fund, Meridian Energy, and Infratil.