How does KiwiSaver work?
It works by allowing individuals to make regular contributions to a savings plan that is managed by a provider.
Enrolment
When an individual wants to join KiwiSaver, they need to choose a scheme and a savings plan and provide their personal details to the provider.
Contributions
Once enrolled, individuals can make regular contributions to their KiwiSaver account, usually through automatic payroll deductions. Employers are also required to make contributions on behalf of their employees, and the government also provides incentives in the form of contributions.
Investment
The money saved in the KiwiSaver account is invested in a range of assets such as shares, bonds and cash, and is managed by professional fund managers. Members can choose the level of risk they are comfortable with and switch funds or providers at any time.
Withdrawals
The money that is saved in the KiwiSaver account is locked until the member reaches the age of eligibility for New Zealand Superannuation (currently 65 years old) or meet the criteria for an exception withdrawal such as buying a first home, significant financial hardship, serious illness or death.
Retirement income
KiwiSaver funds can be used as a source of retirement income, and the member can choose an option that suits them the best such as taking a lump sum or income stream.
First home purchasing
KiwiSaver funds can be used to purchase a first home, and the government also provides a HomeStart grant which is a financial assistance for first home buyers to help them with the purchase of a home.
Overall, KiwiSaver allows individuals to make regular contributions to a savings plan, while also providing government incentives and the ability to use the funds for a first home or as a source of retirement income.
Important information and disclaimer
- Any advice on this publication is of a general nature only and has not been tailored to your specific circumstances. Before taking action on this information, please seek your personal advice. Past performance is not a reliable guide for future returns. The information on this page reflects our understanding of the existing legislation, standards, etc.
In some cases, the information has been provided to us by third parties. While the information is believed to be accurate and reliable, but this is not guaranteed in any way. - Neither AIFP nor its responsible persons or employees give any warranty of accuracy, nor accept any responsibility for errors or omissions in the information provided on this page.