KiwiSaver is an important retirement savings tool for many New Zealanders. While many might be familiar with the basics, there are several lesser-known aspects of KiwiSaver that can have a significant impact on how you manage your savings.
Here are 10 FAQs that might surprise you.
1. What happens to my KiwiSaver if I move overseas?
If you permanently move from New Zealand to another country (excluding Australia), you can withdraw your KiwiSaver savings after one year of living there. However, you won’t be able to take out the government contributions. Your government contributions will be repaid to the Government before your KiwiSaver account is closed.
2. What if I move to Australia?
If you move to Australia, you can transfer your KiwiSaver savings into a complying Australian superannuation fund. The rules for withdrawal will then follow Australian superannuation regulations, which have similar age-based restrictions to KiwiSaver.
3. Can I use KiwiSaver for investment properties?
KiwiSaver withdrawals can only be used for buying your first home if it’s intended to be your primary residence. It cannot be used to purchase investment properties or holiday homes.
4. What is the KiwiSaver “kickstart” contribution?
Before April 1, 2015, the government provided a $1,000 kickstart contribution when people signed up for KiwiSaver. This incentive has since been discontinued, but those who joined before the cut-off date were eligible to receive this.
5. What happens to my KiwiSaver funds if I pass away?
Your KiwiSaver funds become part of your estate upon your death. These funds will be distributed to your beneficiaries according to your will or under New Zealand’s intestacy laws if you don’t have a will.
6. Can I withdraw my KiwiSaver funds for significant financial hardship?
Withdrawal for this purpose is available, but you must meet strict conditions to access your funds due to financial hardship. You can apply to withdraw your contributions and your employer’s contributions but cannot withdraw the government’s contributions. This option is only available under very severe circumstances, like facing the inability to meet basic living expenses.
7. Are unemployed people eligible for KiwiSaver?
Yes, unemployed individuals can join KiwiSaver and contribute directly to their provider. While they won’t receive employer contributions, they are still eligible for government contributions. The government matches 50 cents for every dollar contributed, up to a maximum of $521.43 per year
8. Can I take a savings suspension?
Formerly called a contributions holiday, you can apply for a savings suspension if you’ve been contributing to KiwiSaver for at least 12 months, pausing your contributions for up to one year. You can renew this suspension as needed.
9. Can I claim KiwiSaver funds for home renovations?
No, KiwiSaver withdrawals are limited to purchasing your first home, provided it’s your primary residence. You can’t access your funds for home improvements or renovations.
10. What happens if I contribute too much to KiwiSaver?
If you contribute more than intended to your KiwiSaver account (for example, through automatic payments that you forgot to pause), the extra funds will remain in your KiwiSaver account as any contributions you make over the minimum required amount cannot be returned to you by your KiwiSaver provider.
Do you have any other questions?
As advisers, we work closely with Kiwis in many different situations to understand the outcomes they desire and make sure that their KiwiSaver settings are optimised to help them achieve their financial goals. If you have any questions or want to make sure you’re on track, feel free to get in touch.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.