Jul 13, 2019 10:12:00 AM

Key changes to KiwiSaver

Topics: Kiwisaver, Home Loan, nz mortgage, NZ Mortgage Adviser, Home Loan Advice, Mortgage Advice, Kiwisaver withdrawal 0

There are some changes being made to KiwiSaver in 2019 and 2020, most of which have already come into effect. The proposed changes to the structure of KiwiSaver could see a greater number of New Zealander’s saving for retirement and the risk of a retirement savings shortfall decreasing over time. These changes will allow more people to join the scheme and also allow members to better tailor their KiwiSaver account to fit their needs.

Good saving habits

From 1 April 2019
Two new contribution rates were added to KiwiSaver on 01 April 2019, giving members more options in how they contribute their savings. 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 additional options of 6% and 10% make it easier and quicker for people to save for their retirement without having to make voluntary contributions.

The ‘Contribution Holiday’ where members can elect to temporarily cease contributing to their KiwiSaver account for a specific period of time, has been renamed a ‘Savings suspension’ to remove the positive connotations associated with the word ‘holiday’.

Currently, a contributions holiday can be in place for a maximum of 5 years, but this has now been reduced to 1 year. Members will be able to roll this holiday over, but it will have to be a conscious choice every year. The goal is to get people involved with their KiwiSaver and start making active decisions.

The term 'member tax credit' or 'MTC' is renamed 'Government contribution'.

From 1 July 2019
Anyone aged 65 and older will be able to join KiwiSaver, effectively giving them additional managed fund choices during their retirement.

Additionally, the five-year membership lock-in period no longer applies for new members who join the scheme from 1 July 2019 onwards aged between 60 and 64. This means that when they turn 65, they will be able to withdraw their savings no matter how long they've been a member, they will not be eligible for Government contributions, and their employer can also stop their contributions.

From 1 April 2020
KiwiSaver members impacted by the 5-year lock in period (i.e. members who enrolled before July 2019, and who were aged between 60 and 64 inclusive when they enrolled) can elect to opt out of this lock-in period any time after they reach the age of eligibility for NZ Super at age 65. However, this means they will no longer be eligible for compulsory employer contributions or the government contribution.

KiwiSaver Withdrawal for First Home / Second Chance
Saving for a deposit can feel like an insurmountable hurdle when you’re looking to buy your first home. Even with historically low interest rates and a relatively flat property market, the size of a deposit is a major stumbling block for many first home buyers. Which is why it’s so heartening to read that so many first home buyers are achieving their dreams with help from KiwiSaver first home withdrawal.

KiwiSaver withdrawals for first home buyers now account for almost half the deposit used to secure a first home, according to research by KPMG. What’s more, a far greater number of first home buyers are entering the market. In 2017, first home buyers accounted for just 11.9 per cent of new mortgage lending. Two years down the line and that number has risen to 17.2 per cent in the March 2019 quarter.

Changes to KiwiSaver contribution could help jumpstart your home ownership goals by letting you contribute hundreds of thousands of additional dollars into your KiwiSaver by switching your contribution rate.

If you have questions about accessing your KiwiSaver to fund a deposit for your first home, or questions about joining KiwiSaver and saving for retirement, get in touch with a Mortgage Express adviser in your area.


For more tips and advice around managing your money, consolidating your debts, or applying for finance, follow Mortgage Express on Facebook and Twitter, or contact one of our mortgage advisers.


While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

A Disclosure Statement is available on request and free of charg