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KiwiSaver is a collection of superannuation schemes that meet the government's “KiwiSaver” criteria. For eligible employees, it operates on the principle of “auto-enrolment”. The auto-enrolment rule applies to all new eligible employees (age 18 to 64) who join an employer, unless the employer has an alternative scheme and exempt status. Other employees if under 65 can join, but have to “opt-in”.

Auto-enrolled employees can choose to “opt-out” if they don’t want to save. The ability to opt-out applies only from day 14 of employment (and must be exercised on or before day 56 i.e. 8 weeks). This means that auto-enrolled employees will, as a minimum, contribute between days 1-13, which will be refunded if they then opt-out.

An employee who doesn’t opt-out (or employees who opt in) must save while they are an employee for at least the first year. After 1 year’s membership, they can stop saving by going on a contributions holiday. A contributions holiday is for a minimum of 3 months and a maximum of 5 years, but can be continuously renewed.

Under KiwiSaver, employees:

  • save 3% of their total gross taxable pay, through the PAYE tax system;
  • must save for a minimum of 1 year’s membership;
  • can increase the 3% to 4% (or 8%), at their option;
  • choose which KiwiSaver scheme their money is invested in and can change schemes as they wish;
  • receive the government and employer paid subsidies.

Savings accumulate in a KiwiSaver Account with investment earnings (less taxes and fees).


Government payments

To encourage employees to join and save, the government pays an annual MTC government subsidy (a “member tax credit”) of $1 for each $2 saved by the employee that year, up to $521.43 a year (about $10 a week). To qualify for the MTC you must be 18 or over and under your KiwiSaver Retirement Age.

The government also provides a HomeStart grant (up to $5,000) for those who buy a house and have not previously owned a house, or are financially equivalent to someone who has not previously owned a house. The $5,000, increases to $10,000, if the first home is a newly built house.


Employer subsidy

Employers must subsidise their employee’s savings if the employee is 18 or older and under their KiwiSaver Retirement Age. The minimum employer subsidy is 3% of gross taxable pay. Employers can contribute more. The employer subsidy is subject to employer superannuation contribution tax (ESCT).



Under KiwiSaver:

  • new employees under age 18 are not auto-enrolled and do not have to join.
  • employees over age 65 can’t join, but can continue as members (and save) if they joined before age 65.
  • certain temporary employees and casual agricultural workers aren’t auto-enrolled but are eligible to join.



Retirement benefits are payable from age 65, if the employee joined before age 60. If they joined after age 60, the retirement benefit becomes payable only after 5 years’ membership. Employees do not have to retire to receive a retirement benefit.

Benefits can be paid before age 65 under the first home withdrawal option and in cases of serious illness, significant financial hardship, death, and permanent emigration.

To help employees, employers can:

  • help employees understand the requirements and advantages of KiwiSaver.
  • subsidise an employee’s contributions at more than the compulsory level.
  • select a single KiwiSaver scheme (known as a “chosen scheme”), for employees who don’t make their own decision on a KiwiSaver scheme. If the employer doesn’t do this, and the employee doesn’t choose a scheme, the IRD randomly allocates the employee to a default KiwiSaver scheme.


This is not a product disclosure statement for the purpose of the Financial Markets Conduct Act 2013. A product disclosure statement is available from SuperLife free of charge.