The Government has recently proposed some changes to KiwiSaver for next year.
More contribution rates for employees.
At the moment you can contribute at 3%, 4% or 8% of your pay.
From 1 April 2019, it’s intended that you’ll also be able to contribute at 6% and 10% of your pay.
This gets the big tick from us as it gives you more flexibility over the amount you save.
Perhaps review your level of contributions when you receive a pay increase, it’s a great time to take the opportunity to save a little more.
Savings suspension timeframe reduces
‘Contribution holiday’ changes its name to ‘savings suspension’.
From 1 April 2019, it’s intended that the maximum period for ‘savings suspensions’ reduces from 5 years to 1 year.
If you want to continue with a savings suspension then you’ll need to apply to Inland Revenue each year to renew it.
These two changes also get the big tick from us. A ‘holiday’ generally means good times, stopping your retirement savings might not be the best thing for you in the long run. During this time members also miss out on the government’s contributions of up to $1,042.86 each year (that’s potentially $5,214.30 over 5 years).
Removing the age 65 restriction on joining
At the moment people over 65 cannot join KiwiSaver. From 1 July 2019, it’s intended that the age 65 restriction on joining is removed and the 5 year lock-in period on joining is also removed. There is no change to the age at which you qualify to withdraw your KiwiSaver savings, this remains age 65.
This gets another big tick from us. KiwiSaver will be open to all New Zealanders and provide a convenient and cost-effective investment option to just holding your savings in a bank account or on fixed deposit.
From our perspective, it’ll also allow New Zealanders over 65 to join our Christian KiwiSaver Scheme and have access to investment funds invested under an ethical investment policy.