KiwiSaver, which began in 2007, is undoubtedly a NZ retirement success story, having grown to around $50 billion invested in the 12 years since its inception.
There are many aspects of KiwiSaver which make it a no-brainer for most people, including:
- deductions that happen automatically (before you have a chance to miss the money)
- the payment from the Government each year (free money)
- matching employer contributions up to 3% (free money)
- a good range of different KiwiSaver providers and different investment approaches (choice)
- the ability to use your KiwiSaver to fund a first house purchase or for financial hardship (flexibility)
There are also several changes that came into effect on 1 April this year which are worth noting:
- a broader set of contribution rate options, now 3%, 4%, 6%, 8% or 10%, although note that most employers will still only match your contribution up to 3%
- a break from contributing to KiwiSaver is now called a Savings Suspension, not a Contribution Holiday (which sounded too positive!)
- the payment from the Government is now called a Government Contribution, not a Member Tax Credit
- People over the age of 65 can join KiwiSaver (from 1 July), and there is no lock in period before they can make withdrawals.
The last point is significant as it will open the door to some KiwiSaver products which are great for over 65s, but to date have been inaccessible if the person wasn’t already a KiwiSaver member. For example, the Guaranteed Income KiwiSaver Fund offered by Simplicity, which provides an ongoing annuity payment, and is a good way to generate a regular income stream from your retirement savings.