Making the most of your savings
Some exciting changes happened to KiwiSaver recently that offer you more options for your savings journey.
The big news is that you're now able to put 6% or 10% of your salary into KiwiSaver, as well as the existing options of 3%, 4% or 8%. Your employer contributions will remain at 3%, unless your employer has agreed to a greater amount. Lifting by even a little could help you make extra gains and reach your savings goals faster.
If your circumstances change unexpectedly, you can pause your KiwiSaver savings by applying for what's now called a savings suspension (previously called a contributions holiday). This period was up to five years but has now been reduced to 12 months.
A big change is that if you are 65 or over, you can now join KiwiSaver. Under the new rules, you also won’t have to wait five years to access your money.
If you joined KiwiSaver on or after 1 July 2019, you can generally access your KiwiSaver savings when you turn 65, even if you joined at age 60 or above. If you first joined KiwiSaver (or a complying superannuation fund) before 1 July 2019, you will be able to make a withdrawal at 65 even if your lock-in date is later. However, if you do so, you will lose eligibility for Government or compulsory employer contributions.
When deciding on what type of fund to choose, its best to start with thinking about what kind of journey you want to take and what you want your destination to look like when you get there.
Would you prefer choosing your own mix of funds or to ‘set and forget’ like AMP’s Lifesteps Investment Programme (Lifesteps)?
Feel free to wander around and have a look into the paths available using AMP's fund selector tool.
Putting money into your KiwiSaver account is like fuelling your body or car for an adventure – the more you put in, the further you will go.
The amount you contribute via your salary is up to you to decide – whether its 3%, 4% 6%, 8% or 10%. A little extra now can make a significant difference to what you have when you reach your destination.
You can also lift your savings by making a one off deposit when you come in to some extra money. Think of it as investing in a spare tank of fuel in your boot to get you closer to your destination.
Fuel your future and top up or increase the amount you contribute by talking to your employer.
Just like you pay tax on the wages or salary you earn, you also need to pay tax on the income you receive on investments such as the AMP KiwiSaver Scheme.
With KiwiSaver, the rate of tax you pay is called a Prescribed Investor Rate (PIR) and the rate is largely determined by how much you earn. The current tax rates for KiwiSaver are 28%, 17.5% and 10.5%. It's a good idea to check you are using the right PIR as paying tax using the wrong tax rate is like carrying the wrong size hiking pack - you're either carrying too little or too much.
To ensure you are carrying the right load, use our simple PIR guide.
The Lifesteps Investment Programme (Lifesteps) automatically allocates savings to the fund that matches your age over time. This means your savings are invested in the most appropriate fund for a typical investor your age.
When you’re younger, you can generally accept more unpredictable investment returns, in exchange for the potential to earn greater returns over the long term.
However, as you get older you have less time to recover any losses before needing your retirement savings. Lifesteps aims to reduce the potential for investment losses as you age.
There are a few different ways you can contribute to your savings with the AMP KiwiSaver Scheme. These can include:
• deductions from your pay (via PAYE) • regular payments via direct debit • lump-sum payments via internet banking direct to AMP or via Inland Revenue.
For PAYE payments you’ll need to select how much of your gross salary or wages to contribute: 3%, 4% 6%, 8% or 10%. If you don’t let your employer know, your default rate will be 3%.
Your employer will make deductions at the rate you choose. You may want to check that you are contributing at least $20 a week to ensure that you are contributing enough to get the maximum Government contribution each year.
Find out more about a href="/content/ampnz/kiwisaver/manage/contributing-to-kiwisaver">contributing to KiwiSaver.
AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme (the 'Scheme'). The Supervisor of the Scheme is The New Zealand Guardian Trust Company Limited.
For more information, download a copy of the AMP KiwiSaver Scheme Product Disclosure Statement and Fund Update Booklet, which have been lodged on the Scheme's offers register entry at companiesoffice.govt.nz/disclose
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