myIR, payments and more
KiwiSaver members may need to contact you to:
- join your scheme directly (rather than through their employer)
- elect their contribution rate
- make voluntary contributions
- access their funds.
Joining your scheme directly
Existing employees can join KiwiSaver either through their employer or by contacting you directly. Self-employed people, beneficiaries and people under 18 can only join by contracting directly with you.
For members who earn salary or wages, the minimum contribution from 1 April 2009 is 2% of their before-tax pay. They can choose to save 4% or 8% instead, and can switch between the three rates. Members who contract with you directly and who do not earn salary or wages need to agree their contribution rate with you. If they go on to earn salary and wages they will then have contributions deducted from their pay.
People who don't have contributions automatically deducted, such as self-employed people, can make regular contributions, at a rate agreed with you.
Employees can choose to contribute more than 8%, although amounts above this are not covered by the government guarantee.
Employees can also make one-off lump sum contributions. This can be done through Inland Revenue or directly to you. Such additional contributions cannot be made to Inland Revenue via the employer monthly schedule (EMS), but rather as a separate voluntary contribution.
People on an income-tested benefit will not have KiwiSaver contributions deducted from their benefit. However, they can choose to make voluntary contributions to Inland Revenue or direct to you.
KiwiSaver members who receive weekly compensation from ACC will be able to choose whether to have KiwiSaver contributions deducted from their payments. In this case the contributions will come to you via Inland Revenue.
Generally, KiwiSaver members can't access their savings until they're 65 or have been with KiwiSaver for at least five years, whichever is the later. So if a member joins when they're 61 they won't be able to access their funds until they're 66.
There are special circumstances, with criteria, when they may be able to make an early withdrawal. These include:
- a one-off withdrawal to help with the purchase of their first home, after they've been with KiwiSaver for three years - this withdrawal can be part or all of their accumulated savings (leaving a minimum balance of $1,000 in their account). This withdrawal will be paid to your solicitor on the day the purchase of the property is settled.
- significant financial hardship - the amount of this withdrawal will be based on individual circumstances (less the $1,000 kick-start (if they were eligible) and member tax credit)
- serious illness - this withdrawal may be for all of their accumulated savings including the $1,000 kick-start (if they were eligible) and the member tax credit.
If a member withdraws all of their accumulated contributions, excluding the government contributions, their account remains open for future contributions.
Accounts can only be closed, with all savings including the government contribution withdrawn, when:
- a members' savings mature - they can withdraw them in a lump sum, although you can offer the option of a regular pension payment
- a member moves permanently overseas - they can apply for this after 12 months overseas. In these cases the member will receive the $1,000 kick-start (if they were eligible) but not the member tax credit which is paid back to the Government
- a member passes away - if a KiwiSaver member dies before their savings mature, the savings will be paid to their estate.