The start of a new year is a good time to reflect on your KiwiSaver. We have compiled and answered the most frequently asked questions received in 2024, to help you plan for 2025.
How does KiwiSaver work if I’m self-employed?
For the self-employed, KiwiSaver works similarly to those employed, except there are no employer contributions. Contributions are made voluntarily, giving you flexibility around timing and frequency. You can make contributions directly to the IRD or to your KiwiSaver provider. If you draw a salary from your business and contribute to KiwiSaver, you’ll qualify for ‘employer’ contributions.
Otherwise, your KiwiSaver operates as usual, serving as a way to save for retirement, a deposit for your first home purchase, and receiving the annual Government Contribution if eligible.
What happens to my KiwiSaver if I go on maternity leave?
The IRD offers a paid parental leave payment to individuals who have taken maternity leave and meet their eligibility criteria. By default, KiwiSaver contributions are not made from this payment but there is an option to opt in should you decide to do so. Since 1 July 2024, you have the choice to make KiwiSaver contributions from your paid parental leave. If you decide to do so, the IRD will also make an ‘employer’ contribution of 3%.
If you are still receiving a salary or wage from your employer whilst on parental leave, your employer will continue to deduct your employee contributions as well as making their compulsory employer contributions unless you are on a savings suspension.
What happens if I leave my job and do not work?
Since your KiwiSaver investment is not linked to any specific employer this means that if you were to leave your job and not work, your KiwiSaver will continue to remain invested and managed by your KiwiSaver provider.
Although you will no longer receive any employee and employer contributions, you will still be able to make voluntary contributions to your KiwiSaver at any time. You will also be able to take full advantage of the Government Contribution provided that other eligibility criteria have been met.
What happens to my KiwiSaver when I die?
Your KiwiSaver, like your house and car, is considered an asset, and so becomes a part of your estate after you pass on. If there is a will in place, the assets will be distributed as per the instructions of the will. If there is no will in place, the Court will appoint someone to manage the estate.
If the KiwiSaver balance is less than $15,000, your legal personal representative or next of kin can apply to the KiwiSaver provider directly without needing to provide Letters of Administration or obtaining probate where you leave a will. If, however, the balance of the KiwiSaver account is greater than $15,000, your personal representative will need to apply for probate (when there is a will) or Letters of Administration (when you don’t leave a will) before the KiwiSaver provider can release the funds.
If you’d like further information on these, or other topics, our friendly and knowledgeable Investor Services Team is available and happy to help answer your questions on 0800 662 346 or at [email protected].
