On this page find out about what others may contribute and the other KiwiSaver benefits available.
- Government contributions
- Employer contributions
- Your contributions
- How it all stacks up
- Benefits for first home buyers
- Mortgage Diversion
It all stacks up
The great thing about KiwiSaver is it's not just your money building your nest egg. The Government and your employer may put money in as well. Find out how it could all stack up.
- When you first join KiwiSaver, the Government will kick-start your savings with $1,000.
- You may also be entitled to member tax credits from age 18 until you can take out your end KiwiSaver retirement savings if you mainly live in New Zealand. For the KiwiSaver year 1 July 2011 to 30 June 2012 onwards, the Government's member tax credit rate is dropping from $1.00 for every $1.00 you contribute up to a maximum of $1,042.86 per annum, to $0.50c for every $1.00 you contribute up to a maximum of $521.43 per annum (subject to eligibility).
- If you are employed and contributing your employer will generally contribute as well. They will contribute from when you are aged 18 until when you can take out your end KiwiSaver retirement savings.
- Employer contributions are generally 2% of your gross (pre-tax) salary or wages.
- Compulsory employer contributions (less any tax free contributions your employer makes to a complying superannuation fund for your benefit) will not be subject to employer superannuation contribution tax.
- The Government announced in the 2011 Budget that the compulsory employer contribution rate will increase from 2% to 3% of gross salary or wages with effect from 1 April 2013.
- From 1 April 2012, there will be no exemption from employer superannuation contribution tax ("Contribution Tax") for any employer contributions. From 1 April 2012, Contribution Tax will be deducted at your marginal tax rate before employer contributions are made.
- If you're employed you can choose whether to contribute 2%, 4% or 8% of your pre-tax salary or wages.
- If you are self-employed or not employed you can agree how much you put in with your KiwiSaver provider. The ASB KiwiSaver Scheme has no minimum contribution amounts.
- The Government announced in the 2011 Budget that the minimum employee contribution rate and the default contribution rate will increase from 2% to 3% of gross salary or wages with effect from 1 April 2013.
How it all stacks up
For example, a person earning $40,000 pre-tax a year contributing at 2% for 40 years, could see the combined contributions stack up as follows:
| Government contributions | $ 21,602 |
| Employer contributions | $ 53,399 |
| Your contributions | $ 64,556 |
| Stacking up to | $139,557 |
And your savings could be earning investment returns on top of that (returns may be negative).
Benefits for first home buyers
- After three years of saving, you may be able to withdraw your and your employer's contributions for a first home deposit.
- At the same time, you may be eligible for a first home deposit subsidy (through Housing New Zealand Corporation) of $1,000 for each year of saving up to $5,000 in total. Income and house price caps will apply.
- The first home deposit subsidy and first home withdrawal benefits may also be used to buy land that you intend to build a home on, provided that is intended to be your principal place of residence. If you want to use either of these benefits, you should apply for the benefit before you buy the land as you will be ineligible for the benefit after the land has been bought.
In some circumstances "second-chance" home buyers may also be eligible for these benefits.
Mortgage Diversion
Mortgage Diversion is a facility within KiwiSaver that enables eligible members to divert up to 50% of their own KiwiSaver contributions to help pay off their home loan. Any contributions from the employer and the Government are excluded and cannot be diverted to a home loan.
The Government closed the Mortgage Diversion facility to new applicants from 1 June 2009.
However, if you are already using Mortgage Diversion via the ASB KiwiSaver Scheme, then you may continue to do so for as long as your KiwiSaver and mortgage providers continue to offer this service.
If you are already using Mortgage Diversion then:
- If you transfer out of the ASB KiwiSaver Scheme to another KiwiSaver provider, you cannot continue to use Mortgage Diversion because you will have to complete a new application with your new KiwiSaver provider and under the KiwiSaver Regulations this would be considered a new application for the Mortgage Diversion facility.
- If you change your mortgage provider, refinance or restructure the ownership of your lending with your existing mortgage provider, you cannot continue to use Mortgage Diversion. This is because you will have to complete a new application to include your new or updated lending details, which under the KiwiSaver Regulations is considered a new application for the Mortgage Diversion facility.
- You can still take a contributions holiday or unpaid leave and this will not affect your Mortgage Diversion payments. Your Mortgage Diversion payments will continue again once you start making contributions (for as long as your KiwiSaver and mortgage providers continue to offer Mortgage Diversion).