KiwiSaver


KiwiSaver is a New Zealand savings scheme. Started operating on 2 July 2007, the scheme allows participants to normally access their KiwiSaver funds only after the age of 65, but can withdraw them earlier in certain limited circumstances, for example if undergoing significant financial hardship or to use as a deposit for a first home.
A policy initiative of the Fifth Labour Government of New Zealand, KiwiSaver is governed by various Acts of Parliament, including the KiwiSaver Act 2006, which was passed in September 2006.
As at 31 March 2025, the Financial Markets Authority reported 3,385,856 New Zealand citizens were members of KiwiSaver, with an average balance of $36,349 per member. Annual contributions were $12.2 billion with investment gains of $6.4 billion, and with $123.1 billion in assets managed by KiwiSaver providers.

Basic operation

Anyone who is entitled to live in New Zealand indefinitely and who normally lives in New Zealand is entitled to join KiwiSaver. Those under 18 require parental consent to join. Participants choose to put their savings in one of several "approved savings schemes". They can only belong to one scheme at a time but can change schemes at any time. If they do not choose a scheme, and the participant is aged 18 or over, they will be assigned either to the employer's default scheme or to a government-selected default scheme. Each scheme offers several managed funds to invest the participants' savings in, with varying degrees of expected risk and return.
Contributions are made up of three main components:
  • Employee contribution: Employee participants can choose to contribute 3.5%, 4%, 6%, 8% or 10% of their gross pay, and can switch rates three months after setting a rate. These contributions are deducted from an employee's pay and sent by the employer to Inland Revenue alongside their PAYE tax returns. The self-employed and unemployed can choose how much they want to contribute. All eligible participants aged 18 to 64 starting a new job, with some exceptions, are automatically enrolled in KiwiSaver. New employees can choose to opt out from day 14 to day 56 of their employment.
  • Employer contribution: Employers are required to contribute at least 3.5% of an employee's gross pay to the employee's KiwiSaver account. The employer contribution is taxed at the employee's "employer superannuation contribution tax" rate. ESCT brackets have slightly higher income thresholds than the corresponding income tax brackets, meaning they are taxed slightly less. So the after tax contribution the employee receives in their account is between 2.135%% and 3.1325%.
  • Government contribution: Anyone who contributes over the minimum threshold $1,042.86 between 1 July and 30 June receives a government contribution of $260.72.
From the start of the scheme until May 2015, those who joined KiwiSaver received a $1,000 tax-free "kick start" to their KiwiSaver account from the government. The Fifth National Government removed it effective from 21 May 2015 as part of its 2015 budget. Those aged 16 and over also receive from the government a "member tax credit" of 25 cents per dollar contributed for the first $1,042.86 contributed per year. The MTC is not a true tax credit; it is a monetary contribution paid by the government via Inland Revenue, mainly to offset the tax paid on interest earned. Those withdrawing KiwiSaver funds to help buy a first home may also get a deposit subsidy of up to $5,000 or $10,000 from Housing New Zealand, provided they meet the required income, deposit and house price requirements.
A participant can access all their KiwiSaver contributions once they reach the age of entitlement for New Zealand Superannuation, as long as they have been a KiwiSaver member for five years. Otherwise, KiwiSaver contributions can only be accessed in the following circumstances:
  • a one-off withdrawal after three years to help buy a first home
  • serious illness or death
  • significant financial hardship
  • permanent emigration from New Zealand to a country other than Australia

    Mortgage diversion

Some provider funds offer a mortgage diversion scheme where some of the employee contributions can be used to make mortgage repayments instead of going towards Kiwisaver after a person has been signed up for 12 months. This is only allowed for repayments on the main home, and not for other properties such as investment or holiday homes. Employer contributions will not be able to be used for the mortgage.
This option was abolished by the National Government that came into power in 2008, though employees who used this option prior to June 2009 can continue to use it as long as their provider offers it.

Savings suspension

Persons on the scheme can take savings suspension after 12 months for any period from three months to five years without any limits on future savings suspension.

Children

People aged under 18 may join KiwiSaver if the provider allows their enrolment. If not employed, the child has to agree to a level of contributions with the provider. As soon as the child is employed they must contribute and can never opt out. Children are entitled to the tax credits.
As of August 2021, there were 252,000 KiwiSaver members aged under eighteen.

Funds

Each scheme offers several managed funds to invest the participants' KiwiSaver savings in, and members may invest parts of their savings in different funds. Each managed fund has different risks, returns, investment composition and fees.

Categories

Inland Revenue and the Commission for Financial Literacy and Retirement Income both divide funds into five broad categories, based on their investment composition:
  • Cash funds or defensive funds invest less than 10% of savings in growth assets, such as shares and property, and more than 90% of savings in income assets, such as bank deposits and bonds. These funds are low risk but offer low returns.
  • Conservative funds invest between 10% and 35% of savings in growth assets and between 65% and 90% in income assets. These funds are a medium-low risk but offer medium-low returns. If a member doesn't choose a fund, or they are in a default scheme, their savings are automatically put into a conservative fund.
  • Balanced funds invest between 35% and 63% of savings in growth assets and between 37% and 65% in income assets. These funds offer medium returns with medium risk.
  • Growth funds invest between 63% and 90% of savings in growth assets and between 10% and 37% in income assets. These funds offer medium-high returns but with medium-high risk.
  • Aggressive funds invest more than 90% of savings in growth assets and less than 10% in income assets. These funds offer high returns but with high risk.
Some providers offer a "lifetime" fund option, which sees the member's savings move to more defensive funds as the member ages. An example may have members aged under 35 in an aggressive fund, those aged 35 to 49 in a growth fund, those aged 50 to 59 in a balanced fund, those aged 60 to 64 in a conservative fund, and those aged 65 and over in a defensive fund.

Ethical concerns

There have been concerns raised that members are not easily able to choose ethical investing due to a lack of information about the makeup of funds. In particular, investments which include profits the production of cluster munitions, landmines, and nuclear weapons have been highlighted as being illegal in New Zealand.
There are, however, now at least five funds aimed specifically at these concerns, describing themselves as variously as "socially responsible", "The ethical KiwiSaver scheme for Christians", or expressly excluding "companies involved in cluster bombs, landmines, tobacco, gambling and pornography".

Withdrawing savings

As the main purpose of the KiwiSaver fund is for retirement savings, money can be withdrawn from the fund at the age at which the person is eligible for the government superannuation, currently 65, as long as they have been a KiwiSaver member for five years.
However, money can be withdrawn before retirement in a number of circumstances which are outlined in Schedule 1, of the KiwiSaver Act 2006.
  • After three years contributions can be withdrawn to buy the first home. This excludes the government kickstart of $1000, and until 1 April 2015, the tax credits.
  • In the event of significant financial hardship. This excludes the government $1000 kickstart and tax credits.
  • In the event of serious illness.
  • If a person permanently emigrates from New Zealand to a country other than Australia. This excludes the government tax credit.
  • Divorce or the end of a de facto relationship longer than 3 years. KiwiSaver savings earned during the marriage, civil union or de facto relationship are considered relationship property under the Property Act 1976 and can be claimed against by an ex-partner as with any other relationship property. KiwiSaver savings earned prior to the relationship are considered separate property and cannot be claimed against by an ex-partner.
  • Death. KiwiSaver savings are paid into the deceased person's estate.
If a New Zealander permanently emigrates to Australia, they may choose to keep their KiwiSaver savings in New Zealand or transfer them to a complying Australian superannuation fund. Likewise, if an Australian permanently emigrates to New Zealand, they may choose to keep the Australian superannuation savings in Australia or transfer them to a complying KiwiSaver fund. Regardless of where the money is held, Australian superannuation savings can be withdrawn once the person turns 60 and retires from working, or turns 65 regardless of employment status. Australian savings cannot be withdrawn to help buy a first home.

Grant for first home

KiwiSaver contributors meeting certain criteria can apply for a cash grant to purchase their first home or a piece of land. This grant is for individuals earning less than $85,000 per year or two or more individuals earning $130,000 per year in total. This grant is in addition to the withdrawing savings option.