What is KiwiSaver?
KiwiSaver is a voluntary savings scheme designed to help New Zealanders save for retirement. It also offers benefits for those looking to buy their first home (or in some circumstances, a subsequent home). Once you join, contributions are automatically deducted from your pay and invested in a fund of your choice.
Independent KiwiSaver providers (like SBS Wealth!) manage the savings schemes, and you can choose one of them to manage your savings. KiwiSaver providers offer different funds with various risk levels which determine how your money would be allocated to be invested.
KiwiSaver is for all New Zealand citizens and permanent residents living or normally living in New Zealand.
How does it work?
When you sign up for KiwiSaver, a percentage of your income (usually 3%, 4%, 6%, 8%, or 10%) is deducted from your pay and contributed to your KiwiSaver account. Your employer also contributes, and the government adds an additional contribution if you meet certain criteria. These contributions are invested in a fund that grows over time, helping you build a nest egg for your future.
You can also make voluntary contributions to your KiwiSaver account at any time.
Why is KiwiSaver a good option?
Employer contributions
Your employer is required to contribute at least 3% of your gross salary (before ESCT) to your KiwiSaver account. This is in addition to the percentage of your income you contribute to your KiwiSaver account. Over the next two years, this will increase to 3.5% and eventually 4%.
Government contributions
Each year, the government contributes 25 cents for every dollar you contribute to KiwiSaver, up to a maximum of $260.72 if you contribute at least $1042.86 between 1 July and 30 June. To be eligible you must be aged 16 to 64, meet residency requirements, and not earn more than $180,000 in taxable income per year.
Investment choices
You can choose from a range of funds - from conservative to aggressive - depending on your risk tolerance, investment time horizon, and financial goals. You can use our risk profile calculator or talk to one of our financial advisers to help you select the right fund for you.
First home withdrawal
If you're buying your first home, you may be eligible to withdraw most of your KiwiSaver savings to put towards your deposit. This can make home ownership more achievable. Check out our guide to using KiwiSaver to buy your first home for more details.
Sets you up for retirement
KiwiSaver is designed to grow over time, giving you a nest egg for when you retire. The earlier you start contributing, the more you benefit from compounding returns.
Tips for making the most out of your KiwiSaver account
Review your contributions
Consider whether you're contributing enough to take full advantage of employer and government contributions. If it's possible, increasing your rate even slightly can make a big difference over time.
Choose the right fund
Your fund choice should reflect your goals, investment time horizon, and risk appetite. Younger members might opt for growth funds, while those nearing retirement may prefer conservative options.
Plan for the long term
KiwiSaver is a long-term investment. If you're just starting out this means you have time to ride the highs and lows of the market. Avoid making decisions on short-term market movements and have regular reviews with a financial adviser to help you stay on track.
You can book a time with an SBS Wealth financial adviser below.
