KiwiSaver, Schemes.
With KiwiSaver you can choose a savings scheme to suit you. There'll be a range of scheme providers and several investment types, from conservative risk to growth funds. You can change schemes at any time, but you can only belong to one scheme at a time.
KiwiSaver isn't guaranteed by the Government. This means that you invest in a KiwiSaver scheme at your own risk.
Click here for a list of providers with registered KiwiSaver schemes.
Allocating you to a scheme
If you're being automatically enrolled, or if you're an existing employee who has opted in through your employer, you'll be allocated to your employer's chosen KiwiSaver scheme, if they have one, or to a default KiwiSaver scheme. If you're allocated to a default scheme it will be a "conservative fund".
Six financial institutions have been appointed by the Government to be default scheme providers through a tender process managed by the Ministry of Economic Development. The default providers are:
- AMP Services (NZ) Limited
- ASB Group Investments Limited
- ING (NZ) Limited
- Mercer Human Resource Consulting Limited
- National Mutual Corporate Superannuation Services Limited (trading as AXA New Zealand)
- TOWER Employee Benefits Limited.
When you're allocated to a scheme, we'll send you a letter advising which scheme it is, and a copy of the scheme's investment statement. If your employer has a chosen scheme, you'll receive a copy of the investment statement from your employer.
Please make sure that you read the investment statement. This is an important document that sets out the specific rules, fees, terms and conditions of the scheme, and explains how your money will be invested.
Your contributions will be held by us for the first three months to give you time to get financial advice and choose your own scheme if you want to. After three months, if you haven't opted out or chosen your own scheme, you'll be enrolled in the scheme you were allocated to. Your contributions will be paid, with interest, to the scheme. The $1,000 government kick-start and first $20 fee subsidy will be paid into your scheme account at the same time.
We're required to give your name, address, IRD number and date of birth (if we have it) to your scheme provider.
Choosing a scheme
You can choose your own KiwiSaver scheme at any time by applying to the provider of the scheme you want to belong to. If you choose your own scheme within the first three months of starting your new job, this will override the allocation process.
Changing schemes
If you want to change your scheme, you must apply to the provider of the new scheme you want to join. You can only belong to one KiwiSaver scheme at any time.
When the change is complete, your savings will be transferred to the new scheme provider and you'll be notified of the transfer.
You can get a list of scheme providers on this site.
Scheme fees
All KiwiSaver schemes will charge fees. The scheme's investment statement will set out:
- what fees they charge
- the specific terms and conditions of the scheme
- their investment strategy.
To help offset the fees the Government will pay a subsidy of $20 into your KiwiSaver account every six months. If this subsidy exceeds the actual fees charged by your scheme provider, any excess will stay in your account and be invested along with your contributions.
Fees charged by the six default providers for their default schemes have been negotiated by the Government and prescribed for each provider in their Instrument of Appointment.
There is no prescribed fee structure or level of fees for other KiwiSaver schemes, although the KiwiSaver Act prevents them from charging "unreasonable fees". The Government Actuary, who regulates KiwiSaver schemes, is responsible for:
- determining what constitutes "unreasonable fees"
- the ongoing monitoring of fees.
Taxation of KiwiSaver investment income
Your investment earnings are taxed. This tax will be deducted from your investment earnings and paid by your scheme provider.
If your scheme is a "widely-held superannuation fund" the tax on investment earnings will be at a flat rate of 33% (reducing to 30% from 1 April 2008).
If your scheme is a "portfolio investment entity" (PIE), your scheme provider may ask you for your "prescribed investor rate". All of the KiwiSaver default schemes are PIEs. If your last year's income was greater than $38,000, or your last year's income combined with your investment earnings was greater than $60,000, your prescribed investor rate will be 33% (reducing to 30% from 1 April 2008). If your income was below these levels, your prescribed investor rate will be 19.5%.
Your scheme's investment statement will explain more fully about how investment earnings from that scheme are taxed.
Any withdrawals from your KiwiSaver account are tax-free.
Forms and guides
Check out what KiwiSaver forms and guides are available on the KiwiSaver site.
This information is used by permission. For more info on government services go to newzealand.govt.nz © Copyright 2007 Inland Revenue