Kiwisaver: Read the fine print

Leaving town for cheaper prices can bring forward your first-home purchase.

Q: I am moving out of Auckland in the hope of owning my own home. I am a teacher and have been contributing to AMP's State Sector Retirement Savings Scheme (SSRSS). I now have the option of joining KiwiSaver. Is there any benefit in transferring my savings to it? From what I understand I can only withdraw my own contributions from SSRSS for my first home, which I intend to do within the next year. If I transfer my savings from AMP to KiwiSaver, does the three-year membership requirement before withdrawing funds apply? I have contributed for eight years without any withdrawal.

A: For some, particularly those in the state sector, KiwiSaver won't be the only workplace retirement scheme on offer. It is important to carefully compare options because small differences in things like contribution rates can have a big impact.

The first-home withdrawal is one of the few ways to access KiwiSaver funds before retirement, but you need to be over 18 and signed up for at least three years.

After three years you can withdraw all contributions, including those from your employer and any member tax credits and investment returns, leaving only the last $1000 in your account.

Therese Singleton, general manager, investments and insurance at AMP, which is a KiwiSaver provider and runs your state sector scheme, says the three-year rule applies to all KiwiSaver members.

"Even if you transfer your SSRSS balance to a KiwiSaver scheme you still have to wait three years after making your first contribution to a KiwiSaver scheme before being eligible to make a first-home withdrawal from KiwiSaver.

"The great news is that the board that oversees the SSRSS is currently reviewing the first-home withdrawal options provided under the scheme," says Singleton.

"This may lead to the ability to withdraw more than just your own contributions."

Singleton says there are other benefits to staying in the SSRSS and not transferring to KiwiSaver that you may wish to consider, such as:

• Your employer currently pays a contribution of 3 per cent after tax, rather than the KiwiSaver compulsory contribution of 3 per cent before tax.

• You may also access your savings earlier than in a KiwiSaver scheme, some examples include:

- If you partially or fully retire within 10 years of superannuation age; - When you are 50 or more and have permanently left state sector employment; - If you are a teacher or principal and have reached 50.

The KiwiSaver fund comparison tool on sorted.org.nz can help you decide, but getting professional advice would help if you are considering switching between superannuation schemes.