Helen Twose: Retirees can stick with scheme

You can remain a member of your KiwiSaver scheme even after you reach the age of eligibility for withdrawal. Photo / Thinkstock

Could you please tell me if I will be able to continue in my KiwiSaver scheme as I joined in July 2008, so almost five years ago. But I'm now aged 68.

If it's possible, I would like to continue on with my present arrangement where I pay the minimum monthly amount.

You can remain a member of your KiwiSaver scheme even after you reach the age of eligibility for withdrawal.

Reaching this important milestone simply means that you can start using your KiwiSaver savings as part of your retirement income.

There are a few things that you need to be aware of:

* You can continue to contribute to your KiwiSaver account by making regular or additional contributions.

* You can make withdrawals. For example, in the Mercer KiwiSaver scheme members can choose to make partial or regular withdrawals or withdraw the full amount. We recommend you check with your KiwiSaver provider what withdrawal options they offer.

* You will stop being eligible for member tax credits from the Government on the day you become eligible to withdraw your KiwiSaver savings.

* Your employer can stop making contributions to your KiwiSaver account on the day you become eligible to withdraw your KiwiSaver funds or from the next pay period unless you have agreed with your employer otherwise.

* Once the full amount of your KiwiSaver account has been withdrawn, then your account will be closed and it cannot be reopened again.

* Martin Lewington, Mercer New Zealand head.

Having just been through the whole KiwiSaver deposit subsidy application process with both of my two sons and their partners, I would like you to alert readers to some of the potential problems they will face accessing the subsidy if they have been students and received any student allowance.

My son's partner was initially declined access to the $3000 subsidy on the grounds that she earned income (student allowance) for some of the three qualifying years but did not make a contribution from her student allowance income.

This was in spite of her waitressing part-time the entire time she was a student and making KiwiSaver contributions on that portion of her income.

After getting lawyers involved, Housing NZ seemed to back down (or perhaps the application went to someone who knew what the rules actually are) and they then calculated the "missing portion" of her contribution on her student allowance and allowed her to make a manual payment of $400+ to compensate, thus finally qualifying for the deposit subsidy.

We could find nowhere in the student allowance process that gives an opportunity for KiwiSaver deductions to be made from the student allowance.

If this is true, I can't understand how it is fair that Housing NZ treats student allowance as income for their purposes.

Could you please follow this up and get some clarification on whether this is correct and whether students are given a choice to have KiwiSaver deductions made.

If there is no option to opt into KiwiSaver when a student takes up the allowance, then how does Housing NZ expect the student to make payments?

I can imagine it would be quite a trap for many of them who dutifully pay KiwiSaver off other sources of income but treat student allowance as a benefit that is not subject to the KiwiSaver regime.

There are a number of issues to consider with such applications:

* To qualify for the deposit subsidy, members must contribute the minimum percentage of their total income earned, not just income earned through employment.

* Total income earned can be by obtaining the relevant certificate of earnings from the IRD website www.ird.govt.nz.

* Income is as defined in the Income Tax Act 2007 - a Studylink allowance is deemed to be income.

* Members are able to have KiwiSaver contributions directly deducted from their salary/wages.

However, this is not possible for those members who are self-employed, on a benefit, have no income or in receipt of a student allowance.

Anyone in receipt of these types of income would need to make voluntary payments directly to their KiwiSaver scheme provider or IRD.

* KiwiSaver contributions are the responsibility of the individual member and if applying for the deposit subsidy they need to make sure that they contribute sufficiently to meet the eligibility criteria.

* Top-up payments are only permitted to those who have made regular contributions, but where the savings fall short of the minimum level.

Top-up payments are not permitted for clients where no contributions have been made in the past and where such clients want to make a back payment to cover the missing period, in order to qualify for the subsidy.

The main point to consider for those on Studylink allowances, benefits, with no income and those who are self-employed and who want to qualify for the deposit subsidy, is that they make voluntary contributions towards their KiwiSaver accounts to cover this income.

At the time of application their income earned and contributions made can then be assessed and if the total contributions made do not meet the minimum percentage requirement, a top-up payment can be made.

This amount would be calculated by the KiwiSaver deposit subsidy team.

If no voluntary contributions are made whilst in receipt of Studylink allowances and this is the only stream of income, then top-up payments are not permitted.

If there are any direct questions on this issue, members should email kiwisaver.firsthome@hnzc.co.nz for a response.

* Housing New Zealand spokesman.

* Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.