As of April 1, the following changes came into effect:
There are two new contribution rates, giving members who are on PAYE more options in how they contribute to their savings. The new contribution rates are 6% and 10% – meaning there are now 3%, 4%, 6%, 8% and 10% options for all members.
The ‘Contribution Holiday’ – where members can stop contributing to their KiwiSaver account for a specific period of time, has been renamed a ‘Savings Suspension’. The maximum holiday period has been reduced from 5 years to one year. Note that if you’re currently on a Contribution Holiday, you won’t be affected until it expires.
The ‘Member Tax Credit’ has been renamed the ‘Government Contribution’. This is a minor change, but an important one. The Government Contribution has nothing to do with tax and was just plain confusing.
There are also a few changes coming up as from 1 July this year:
People aged 65 and over will now be able to join KiwiSaver.
Currently, if you join KiwiSaver between 60 and 64, you can’t access your money for 5 years, but you will get the full Government Contribution during those 5 years, provided you contribute at least $20 per week. From 1 July 2019, your money is not locked in, but you also won’t get the Government Contribution once you turn 65. If you’re under 65 and haven’t joined KiwiSaver yet, join before 1 July if you still want to get the Government money, which is $2,607 over 5 years.
Mark Lynch is a Financial Adviser. His Disclosure Statement is available free upon request. Any comments in this column are the opinion of the writer and should not be construed as financial advice.