First job

Starting your first job is an important time with lots to take in. One of the most important decisions you could make is your KiwiSaver decision.

What will happen?

When you start your first job or change jobs, if you are not already a KiwiSaver member and are aged 18 or over you will generally be automatically enrolled into KiwiSaver. You can then choose to remain in KiwiSaver or opt-out. If you wish to opt-out you can do this between the end of the second and eighth week of starting your new job by letting your employer or Inland Revenue know.

If you choose to stay in KiwiSaver, you don't need to do anything else if you don't want to. Your contributions will automatically start from your first pay at a level of 2% of your pre-tax salary or wages. You can choose to change your contributions to either 4% or 8% at any time. You will be automatically placed in your Employer's Chosen KiwiSaver Scheme if they have one or, if they don't have one, in one of the six Government chosen KiwiSaver schemes (referred to as default KiwiSaver schemes). However if you want you can choose to:

• Select a different contribution amount from the options available.
• Choose which company looks after your KiwiSaver savings by selecting your own KiwiSaver scheme.

If you are already a KiwiSaver member when you start your first job you need to let your employer know and they will start taking your contributions from your salary or wages and pass to Inland Revenue to transfer to your KiwiSaver scheme.

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.

Why should I stay in KiwiSaver

Although retirement may seem like a long way off, the earlier you start the more you will have tucked away as a nest egg as your savings will have much longer to grow. Plus there are two major benefits offered for KiwiSavers who haven't bought their first home:

• After you have been a KiwiSaver member for three years you can apply to withdraw any contributions you have made plus any employer contributions for use towards a deposit for your first home.
• At that time you may also be eligible for a first home buyer's grant from the Government of $1,000 for each year that you've been in KiwiSaver (up to $5,000). Income and house price caps will apply. Find out more information at www.hnzc.co.nz
• Both of these benefits are also available to KiwiSavers who qualify as second-chance home buyers.