KiwiSaver - how it works

The KiwiSaver Scheme - How does KiwiSaver work?

All new employees (with a few exceptions) aged 18 and over or under age 65 are automatically enrolled into KiwiSaver when they start new employment (unless your employer is exempt). If you are automatically enrolled, you can choose to "opt-out" by advising Inland Revenue or your employer of your decision by completing an 'opt-out' form between the end of the second and eighth weeks after commencing employment.

If you are self-employed, or not currently employed, you can also join a KiwiSaver scheme directly as an individual through this site. Its as easy as 123

How do contributions work?

If you are an employee, contributions are deducted from your after tax salary or wages at a rate of 3%, 4% or 8% of your gross (before tax) salary or wages.

Your regular contributions to a KiwiSaver scheme will start from your first pay after commencing employment or requesting to be enrolled.

Contributions will be paid by your employer to Inland Revenue and then passed on to your chosen KiwiSaver scheme provider.

For the first three months your contributions will be initially held by Inland Revenue before being paid, with interest, to your scheme provider for investment in your KiwiSaver scheme.

You can choose to contribute amounts in addition to the required rates of 3%, 4% or 8%, but you will need to contribute the additional amounts directly to your scheme provider. Some schemes let you set up a direct debit if you wish to make regular additional contributions.

If you are self-employed or not currently employed, you will need to agree your contributions level with your chosen scheme provider and it is suggested maximise the government tax credit. See this Individual Calculator

After 12 months of contributing you can apply to stop contributions for between three months to five years at a time by applying for a contributions holiday.

Contributions resume at the end of the holiday unless you apply for a further contributions holiday. A contributions holiday may be permitted by Inland Revenue before the initial 12 months are complete in the case of financial hardship.

Any Kiwi up the age of 65 can join KiwiSaver and get some of the member benefits..

Savings are generally 'locked in' until the date a member reaches New Zealand Superannuation qualification age (currently 65 years) or the date on which they have been a member of a KiwiSaver scheme for a minimum of five years, whichever is later. In certain circumstances, a member may make a withdrawal for the purpose of purchasing a first home and may be able to divert some of their employee contributions to repay their mortgage, provided the scheme is offering an appropriate mortgage diversion facility and the terms of that facility permit.

Withdrawals before the age of 65 may be allowed if:
  • A member is suffering or likely to suffer significant financial hardship or is suffering serious illness;
  • A member permanently emigrates;
  • A member dies;
  • Required by an Act of Parliament;
  • It is for the purpose of a member purchasing their first home.

There are specific criteria for these withdrawals and detailed information must be provided for the withdrawals to be permitted.

Members' contributions will be automatically deducted from their salary or wages by their employer. The KiwiSaver scheme may also automatically follow the member from one job to the next, meaning they only need the one KiwiSaver account over their entire working life.

KiwiSaver Members
People who save through a KiwiSaver scheme will benefit from a tax credit that matches their contribution, up to a maximum of $10 per week ($521 per year) for year ending 30 June 2012. For those who are employees, compulsory matching employer contributions were phased in from 1 April 2008.

These additional contributions will increase the funds available to members on retirement, helping to improve the adequacy of retirement incomes.


Yes there are some great benefits to KiwiSaver:

  • If you are employed, your employer will contribute 3% of your gross income less tax into your KiwiSaver scheme account.  That is in addition to the contributions that you make yourself to the scheme.
  • Government will contribute $521 annually to your account in the form of a tax credit. So it could surprise you just how quickly you accumulate funds for retirement.
  • If you’ve been contributing to KiwiSaver for three years or more, you may be eligible for a KiwiSaver HomeStart grant of up to $10,000 to buy a new home, or up to $5,000 to buy an existing one. And if you’re buying with a partner, you could get double that. 
  • Changes to the KiwiSaver first-home withdrawal were also introduced on 1 April 2015 that mean all contributions including member’s tax credits can be withdrawn(with the exception of the Government $1,000 kick-start).

NOTE - As of 2pm 21st May 2015 the $1000 kick-start for people opening a KiwiSaver account stopped.

Note: qualifying fee subsidy and members tax credits (MTCs) ceases once a member reaches KiwiSaver end payment (65 or 5 years after joining - which ever is later). MTC's also cease after KiwiSaver end payment date and if the member moves overseas and are not paid if a member is under the age of 18.

•Employee contributions are voluntary.
•New employees are automatically enrolled in KiwiSaver, but can choose to opt out.
•Existing employees will be able to opt in. New employees whose employer is exempt from automatic enrolment will also be able to opt in.

The contribution rates from gross salary is either 3 per cent, 4 per cent or 8 per cent. The default contribution rate is 3 per cent unless the higher rate has been elected by the employee.

Anyone is able to join KiwiSaver by contracting directly with a scheme provider and making contributions. These contributions can be of any amount subject to a provider's agreement and will be eligible for the member tax credit.

Once you've joined, you can make voluntary contributions (lump sum payments) at any time, either directly to your KiwiSaver provider or though Inland Revenue.

If you are self employed or not employed

  • You can join KiwiSaver by contracting directly with a KiwiSaver provider.
  • Your contribution rate will be the minimum or greater determined by the scheme provider
  • Government will contribute $521 annually to your account in the form of a tax credit. So it could surprise you just how quickly you accumulate funds for retirement.


  • Contributions are locked in until the age of eligibility for New Zealand Superannuation (currently 65 years of age) or five years of membership, whichever is the later.
  • Exceptions will be made for some funds to be withdrawn for the purchase of a first home, significant financial hardship, serious illness and permanent emigration.

Choice of Scheme

  • Savers can select which KiwiSaver scheme to join and which investment products to have and the saver can change schemes or investment products at any time.
  • Savers who do not specify a KiwiSaver scheme are allocated by Inland Revenue to a conservative investment strategy fund with one of six named default KiwiSaver scheme providers.
  • Savers can only belong to one KiwiSaver scheme at any point in time.

Impact on State sector employees

Like private sector employees, employees in the State sector will be able to opt into KiwiSaver and receive KiwiSaver benefits, such as the member tax credit.

In some circumstances, contributions that State sector employers make to existing superannuation schemes e.g., the State Sector Retirement Savings Scheme (SSRSS), will count towards the required compulsory employer contribution. In these situations, employees will not be eligible for KiwiSaver compulsory employer contributions as well.

Recently members of the State Sector Retirement Savings Scheme (SSRSS) and have asked to decide between SSRSS and KiwiSaver.

Members can join and remain in both schemes, but will only receive an employer subsidy in one scheme. The decision on which is best for you will be determined by how long you before your retirement. If close, then the SSRSS might be the better option. Note your KiwiSaver funds are locked in for a minimum of 5 years. Here is a comparison of the contributions you can expect in both schemes which should assist in your decision.

Q & A

Is participation compulsory?
No, a person can choose whether they are part of KiwiSaver or not. KiwiSaver is open to all resident New Zealanders up the age 65. (You need to be living in New Zealand at time of application).

Anyone starting a new job is automatically enrolled in KiwiSaver. However, they can 'opt out' of KiwiSaver up to eight weeks after starting their new job, and any deductions made during this time will be refunded.

Can anyone join?
A person can also elect to 'opt in' to a KiwiSaver scheme regardless of their employment status. To do this, they need to either:
  • Contract with a KiwiSaver scheme provider; or
  • If an employee, give their employer a KiwiSaver deduction notice and Inland Revenue will automatically allocate them to a default KiwiSaver scheme if the employer does not have a preferred KiwiSaver scheme.

What choices do savers have?

Choice is important in encouraging individuals to take an active interest in their financial decisions.

KiwiSaver members will be able to:
  • Choose a KiwiSaver scheme.
  • Choose a contribution rate of either 3%(default rate if no choice is made), 4%, or 8% of gross salary or wages before tax. They will be taxed on these contributions as they are with other income.
  • Transfer between KiwiSaver schemes at any time.
  • Cease contributions by applying to Inland Revenue for a contributions holiday after a minimum contribution period of 12 months. The contributions holiday will be for a period of up to five years (minimum three months) and can be renewed at the end of the period.
  • Pay additional lump sums or transfer superannuation investments into their KiwiSaver scheme.

Information has been provided to help people make decisions about KiwiSaver to Employers and Employees by Inland Revenue. It is also available on the sites and

Inland Revenue will randomly allocate employees to a default provider, unless their employer has nominated a preferred scheme of which their employees will become members, or they choose to become a member of another scheme.

What is a default provider?
New members of KiwiSaver who do not select a preferred provider, and who are not allocated to a scheme by their employer, will be allocated to a default provider. The six default providers have been selected following an open and competitive tender process carried out by the Ministry of Economic Development last year.

The method of allocating a member to a default provider is expected to be by rotation around the six providers.


For more Q & A visit KiwiSaver FAQ If you have question, just ask here.