While most changes are minor, many of you could be impacted by a range of changes being made to KiwiSaver.
The good news is that more than 2.4 million of us are invested in a KiwiSaver Scheme. The not so good news is that over 1.5 million KiwiSaver members don’t make any contributions, despite there being some great advantages of contributing to KiwiSaver.
The government is taking steps to encourage more of us to actively use a KiwiSaver scheme and has approved two rounds of changes to occur this year. More changes have been signalled for 2020.
From 1 April
- There are two new contribution rates added to KiwiSaver, giving members more options on how they add to their investments. The new contribution rates are 6% and 10%, which means there are now options for all members of: 3%, 4%, 6%, 8% and 10%.
- The ‘Contribution Holiday’ has been renamed the ‘Savings Suspension’. This is where a member can elect to temporarily cease contributing to their KiwiSaver scheme for a specific period. The suspension will now also have a maximum period of one year before a KiwiSaver member will need to renew it. Learn more about savings suspensions
- The annual ‘Member Tax Credit (MTC)’ has been renamed the ‘Government Contribution’ which more accurately reflects that you don’t have to pay any tax to receive this benefit. The government contribution is probably the most easily accessible benefit of KiwiSaver as most people are eligible for it – including the self-employed.
From 1 July
- People over 65 will be able to join KiwiSaver. However, we strongly encourage anyone over 65 who is considering joining KiwiSaver to make contact with one of our advisers before taking any action, as there could be estate planning implications which are best discussed with a professional.
- Members between the ages of 60 to 64 (inclusive) who enrol on or after 1 July 2019 will be able to withdraw their KiwiSaver funds at 65. New members will no longer be locked in to the scheme for five years. This makes KiwiSaver more attractive for those in that age bracket.
While some benefits of KiwiSaver make it a ‘no-brainer’ for nearly everyone to become a contributing member, KiwiSaver does have drawbacks – including that numerous New Zealand governments continue to make changes to it like those explained above! This means it’s well worth your while to arrange a free and no-obligation chat with our advisers to check that your KiwiSaver Scheme is suitable to meet your needs, and to explore other options if needed.