How KiwiSaver works

We know that saving for the future is a must, and the earlier the better. But it can feel almost impossible! That's where KiwiSaver comes in. KiwiSaver makes it easy to save and grow your nest egg for retirement.

Before you get started, it’s helpful to learn a bit about KiwiSaver. We’ll explain how KiwiSaver works, why you should join, when you can use your KiwiSaver savings, and more.

KiwiSaver is a long-term savings initiative started by the Government in 2007. It is designed to help you save for your retirement as well as other features such as helping you to save for your first home or in some cases your second home.    

As a KiwiSaver member, the default minimum contribution deducted from your income is 3%. You can decide to increase your contribution rate to 4%, 6%, 8%, or 10%. Your KiwiSaver contributions are calculated on your before-tax pay, which your employer automatically deducts from your income, and is then deposited into your KiwiSaver account.

One of the biggest advantages of KiwiSaver is that, if you're contributing, you can also receive compulsory employer contributions too. Plus, every year, the government can contribute to your KiwiSaver savings as well! Another important thing to know is that your KiwiSaver balance doesn’t just sit there. Your KiwiSaver provider manages and invests your savings in a variety of assets like stocks, shares, property, and term deposits, to help your money grow over time.

Who can join KiwiSaver?

To be eligible for the KiwiSaver scheme, you must meet the following criteria:

  • You are a New Zealand citizen, or you are entitled to live in New Zealand indefinitely (NZ Permanent Resident). If you’re on a student visa, work visa or any other temporary visa you are not eligible.
  • You live, or normally live, in New Zealand (exceptions might apply for some New Zealand government employees).

Individuals of all ages can join KiwiSaver, but different rules apply:

  • Under 18: Parent or legal guardian needs to be involved in the sign-up process.
  • Between 18 and 65: You can join on your own.
  • Over 65: Can join on your own, and your funds are unlocked so you can use them for any reason, but you won't be eligible for government contributions.

You don’t need to have permanent employment to join KiwiSaver, although new employees who are eligible are automatically enrolled in the scheme. But if you're self-employed you can join too and make regular contributions to your KiwiSaver account. If you've previously opted out of KiwiSaver, you can join at any time.

You can also join if you are transferring to AMP from another provider’s KiwiSaver scheme.

What can you use KiwiSaver for?

KiwiSaver accounts are retirement savings schemes where you can withdraw some or all of your savings when you reach your qualifying date, currently age 65 in New Zealand.

There are certain situations where you can access your savings early. You can also withdraw some of your savings once you have been a member for 3 years to help buy your first home. Early withdrawals might be possible if you experience serious illness, significant financial hardship, or if you move overseas permanently.

Find out ways you can use KiwiSaver

How does KiwiSaver work for individuals?

Starting a new job comes with a mix of excitement, nerves, and of course, paperwork. Among the latter might be enrolment into KiwiSaver. There are two main ways you can join a KiwiSaver scheme: automatic enrolment or voluntary enrolment.

If you’re starting a new job and are between 18 and 65 years old, your employer might sign you up for KiwiSaver automatically. They’ll make sure you're eligible and provide you with all the KiwiSaver information and forms you need.

Don’t want to join your employer’s chosen KiwiSaver scheme? No worries, you can choose to opt out and choose a KiwiSaver scheme provider you want to join or opt out of joining KiwiSaver all together.

If you’re eligible for KiwiSaver but not automatically enrolled, or a self-employed individual, you can still join KiwiSaver voluntarily. All you have to do is ask your employer for a KiwiSaver information packet or pick a KiwiSaver provider and sign up with them directly. With AMP, you can join online in a few easy steps.

How does KiwiSaver work for employers?

Employers play a key role in helping their employees save for the future with KiwiSaver. They automatically enrol eligible new hires into KiwiSaver, deduct contributions, and even add their own employer contributions!

How much will your employer contribute?

If you contribute a portion of your before-tax pay to KiwiSaver, your employer will contribute too. Typically, they will contribute a minimum of 3% of your gross salary or wages to your KiwiSaver account. There are some exceptions, like if they are contributing to a superannuation scheme on your behalf.

If you decide to opt out of KiwiSaver, you could be leaving money on the table. You would miss out on the additional 3% contributions from your employer, along with any government contributions. So, joining KiwiSaver can be super beneficial for your future financial well-being.

How does the government contribute to your KiwiSaver savings?

For every dollar you invest into your KiwiSaver account, the government contributes 50 cents - up to $521.43 each year.

The government’s contribution to your KiwiSaver account is a great tool for boosting your savings. Regular contributions, paired with the government’s yearly boost, can add up over the years, helping the growth of your savings.

Government contributions to KiwiSaver

Growing and managing your KiwiSaver Contributions

With KiwiSaver, how much you contribute is up to you. And you can change how much you want to contribute whenever you want.

If you are working you can choose contributions of 3%, 4%, 6%, 8% or 10% of your before tax pay to KiwiSaver. If you don’t tell your employer how much you want to contribute, they will set it at the default rate of 3%. You can easily adjust your contribution rate by giving your employer written notification, through Inland Revenue or directly through your KiwiSaver provider.

If you want to give your savings a boost, you can make extra voluntary contributions directly to your KiwiSaver provider or through Inland Revenue in regular payments or one-off lump sums. 

If you’re an AMP KiwiSaver Scheme member, or are considering choosing AMP as your KiwiSaver provider, with MyAMP (online or mobile app) you can check your KiwiSaver balance, do one-off top ups or set up regular automatic payments, change funds, or change your KiwiSaver contribution rate all in one place.

Why is it important to choose the right KiwiSaver fund?

Choosing the right KiwiSaver fund is one of the most significant financial decisions you’ll ever make. It can add up to tens of thousands of dollars over time. So, it’s important to choose the right fund for you.

What you’re investing in will come down to the type of fund that you’re enrolled in. Each fund has a unique focus, designed to suit people with different financial goals and levels of risk tolerance.

The four common KiwiSaver fund types are: conservative fund, balanced fund, growth fund, and aggressive fund. You can invest in several types of funds, each with its own risk and reward profile and potential investment returns.

Choosing the right fund involves careful thought about your future needs. Whether you aim to buy a house in five years, retire in six years, or have a long way to retirement, these factors should guide your decision. Try our KiwiSaver calculator to plan your investment journey.

Compare AMP KiwiSaver Scheme funds

How do KiwiSaver providers invest your savings?

With the contributions that you make to your KiwiSaver fund, your KiwiSaver provider will invest in various assets to help your savings grow over time. Remember, each provider has a unique investment strategy; what’s important is to ensure their approach resonates with your financial goals and values. 

At AMP, we believe that the future is about putting money into good. AMP’s investment strategy is rooted in sustainability minded decisions that we believe will go towards healthy fund performance.

Our definition of sustainability is comprehensive - it includes environmental protection but also focussing our efforts on a wide range of social issues to promote a thriving community and economy. We back this up by applying exclusionary thresholds to the investments we make to avoid supporting certain industries as much as possible, such as those related to production of fossil fuels, palm oil, nuclear power, and controversial weapons.

AMP's sustainable investment philosophy

Do you have to pay tax on KiwiSaver savings?

Just like any other form of income, KiwiSaver comes with tax implications. The KiwiSaver scheme is taxed as a portfolio investment entity (called a PIE) that contains various fund options. The PIE’s taxable income (or loss) will be attributed to you based on your share in the PIE’s fund(s).

The PIE pays tax to Inland Revenue on your share of the PIE’s taxable income at your Prescribed Investor Rate (PIR). Your level of taxable income will determine your PIR - either 28%, 17.5% or 10.5%, depending on your individual circumstances. 

It's important to provide your correct Prescribed Investor Rate (PIR) and Inland Revenue Department (IRD) number, as failure to do so could lead to being defaulted to the highest PIR of 28%, potentially resulting in overpayment of tax, or in certain circumstances, you may be liable for additional tax if you've been on a lower PIR than you should have been.

What role does Inland Revenue play in KiwiSaver?

Inland Revenue (IRD) plays a critical role in the smooth functioning of KiwiSaver. They manage the KiwiSaver contributions and pass them on to the KiwiSaver scheme providers.

Also, if you haven’t chosen a KiwiSaver scheme or haven’t been automatically enrolled into one, IRD will assign you to a default scheme or your employer’s chosen scheme. 

If you want to opt out of KiwiSaver or need a break from contributions? IRD is your point of contact. If you wish to opt out of KiwiSaver, you can make the request within week two and week eight of starting your new job.

For those who need to hit pause on KiwiSaver contributions, you can also request a savings suspension from the IRD.

Not an AMP KiwiSaver Scheme member yet?

Understanding KiwiSaver is the key to unlocking your financial security. From making the most of employer and government contributions to choosing the right provider, every informed decision brings you a step closer to your financial goals. And if sustainability matters to you, choosing a provider like AMP might be the right move.

Looking for expert KiwiSaver advice?

Navigating your financial future can be complex, but you don’t have to do it alone! Financial advice can help you keep on top of your KiwiSaver savings plan, particularly if you are thinking about changing providers. By speaking with a financial adviser, you will find out how your plan is working (or not) for you and make some suggested changes if needed.

Book a consultation and we’ll get in touch at a time that suits you.

As an AMP KiwiSaver Scheme customer, you have access to financial advice whenever you need it which can be obtained either through AMP or an external Adviser. The financial advice that can be provided by an internal AMP Adviser is limited to AMP products, whereas an external Adviser may be able to advise you on a broader range of financial matters.

Helpful resources for your KiwiSaver journey

Optimise your KiwiSaver investment

Your choice of KiwiSaver fund can make a huge difference to the amount of money you have to spend in retirement, and age, risk tolerance and financial goals should be taken into account. Here’s all you need to know.

Find the perfect fund

Grow your money with managed funds

Looking to grow your savings outside of KiwiSaver too? AMP Managed Funds are an effective way to do just that, requiring no minimum investment, offering consistent, healthy returns, granting you the flexibility to withdraw when you need to.

AMP Managed Funds

Planning for retirement with KiwiSaver

The better prepared you are for retirement, the more enjoyable and comfortable it will be. KiwiSaver plays a significant role in retirement planning, so head to our hub to find out how you can live post-work life to the fullest, from understanding how much you need, to transferring over Australian superannuation.

KiwiSaver and retirement