With a KiwiSaver scheme, the government is adding to your savings - and assuming current Government policy is passed by Parliament - your employer is likely to be too.
A Your employer forwards the contributions to Inland Revenue, which forwards them to your KiwiSaver account.
B This can be for any length from three months to five years. You can only take a contributions holiday once you've been in KiwiSaver for 12 months - or less if you're experiencing financial hardship.
C The exact amount of the tax credit will depend on how much you're paying into your KiwiSaver scheme - the government will match your contributions up to the $20 a week limit.
D To sweeten the deal for employers, the government is giving them a tax credit of up to $20 per week per employee.
How does KiwiSaver work?
KiwiSaver contributions
If you're an employee and you join KiwiSaver, you'll have to pay either 2%, 4% or 8% of your before tax pay into a KiwiSaver scheme. Your employer will take your contributions out of your payA .
If you want to switch from 2% to 4% or 8% or back again you can - but no more than once every three months.
After you've been in KiwiSaver for 12 months, you can also take a contributions holidayB , meaning you don't have to pay into the scheme.
You can make lump-sum contributions directly to your KiwiSaver scheme at any time, on top of your regular contributions.
Government contributions
To help you save, the government will kick-start your savings with a $1000 tax-free lump sum and give you a tax creditC of up to $20 a week ($1040 a year).
Employer contributions
With some exceptions, from April 1 2009 your employer has to contributeD 2% of your before tax pay. Some employers are choosing to contribute more than they're required to.
If you're self employed
If you're self employed, you'll have to agree with your provider how much you'll pay into the scheme and how often, and you'll need to make the contributions yourself. You can find out more about how KiwiSaver works for the self employed from www.kiwisaver.govt.nz. Make sure you understand the rules before you join a KiwiSaver scheme.
More than one job?
If you have more than one job when you join KiwiSaver, you can choose which job or jobs you contribute from. If you take on an additional job after joining KiwiSaver, you'll have to contribute from that job for at least 12 months; after that you can take a contributions holiday.
Important
Like you, we can't predict the future - which means we can't guarantee the performance of any savings scheme. Nor do we endorse any specific KiwiSaver provider or scheme. ConsumerSaver is a good starting point - but, before you commit, we strongly suggest you seek independent financial advice. See our full disclaimer.
