These changes are industry wide and apply to all KiwiSaver schemes. The changes come into effect on three dates:
From 1 April 2019
- Two new contribution rate options have been added. Members can now contribute 6% or 10% of their before-tax pay via their employer, as well as the existing 3%, 4% or 8% contribution options.
- The term 'member tax credit' or 'MTC' is renamed 'Government contribution'.
- The name 'contributions holiday' is renamed 'savings suspension', and the maximum time period for a savings suspension is being shortened from five years to one year.
From 1 July 2019
- Anyone aged 65 or over will be able to join KiwiSaver.
- The five-year membership lock-in period will no longer apply for members aged 60-64 who join a KiwiSaver scheme for the first time. This means that when members turn 65:
- they will usually be able to withdraw their savings no matter how long they've been a member
- they will not be eligible for Government contributions
- their employer can also stop their contributions
Please note: Anyone aged 60-64 who joined a KiwiSaver scheme for the first time before 1 July 2019 will still be subject to the five-year membership lock-in period, which means that they can be eligible for Government contributions and employer contributions for the five-year period.
From 1 April 2020
- From 1 April 2020, members can opt out of the five-year minimum membership lock-in period. If a member opts out, once they turn 65 they will not receive Government contributions and their employer can stop their contributions.
Why are these changes happening?
The Taxation (Annual rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019/05) sets out all of the changes, except the member tax credit change which was an industry change.
The Act benefits members by:
- Giving members a wider range of contribution rates to choose from.
- Allowing more people to join KiwiSaver, as those aged 65 or older will be able to join.
- Making it clearer that stopping contributions has a negative impact on retirement savings, by changing the name 'contributions holiday' to 'savings suspension'.
The two sets of changes in 2019 are happening on different dates to align with the tax year (end of March) and the KiwiSaver year (end of June).
The KiwiSaver retirement withdrawal rules are changing. What does this mean for me?
If you're aged 60-64, there are KiwiSaver changes happening in 2019 that you need to be aware of.
- If you first joined a KiwiSaver scheme or a complying superannuation fund before 1 July 2019, your savings will usually be 'locked in' for five years. You can still receive employer and Government contributions over this five-year period.
- From 1 April 2020, you will have the option to opt out of the five-year membership lock-in. If you opt out, once you turn 65 you will not receive Government contributions and your employer can stop their contributions.
- If you join a KiwiSaver scheme for the first time on or after 1 July 2019, you will usually be able to access your savings as soon as you turn 65, regardless of how long you've been a member. When you turn 65, you will not be eligible for Government contributions and your employer can also stop their contributions.
I'm a KiwiSaver member. Do I need to do anything?
The good news is that members don't need to do anything - the changes simply give members more options. If you want to change your contribution rate or apply for a savings suspension, here's how;
- To change your contribution rate, you'll need to fill out the Inland Revenue's KS2 form and give the completed form to your employer.
- To apply for a savings suspension, you'll need to contact Inland Revenue and fill out the Inland Revenue's KS6 form.