Shelley Hanna: Is KiwiSaver over when I turn 65

Q I joined KiwiSaver on September 15, 2007. I have been contributing, and my employer has also been contributing on my behalf, since. I turn 65 on June 24. What will happen then, will I still be able to contribute? I understand my employer will no longer have to contribute after I turn 65. If I can continue, can the payments be taken out of my wages by my employer? I intend to keep working after I turn 65.

I am sure you are happy that you have been contributing to KiwiSaver since 2007. You will have built up quite a healthy balance by now, with help from Government and employer contributions.

You are correct, your employer will no longer have to contribute to your KiwiSaver fund once you turn 65. By June this will be 3 per cent of your salary (less tax). However, it would pay to check your employment contract. Do you know if you are paid more than a co-worker who is not a KiwiSaver member?

According to the relevant legislation: "Compulsory contributions must be paid on top of gross salary or wages except to the extent that parties otherwise agree after 13 December 2007."

Some employers structure their workers' salaries so that the employer contribution is part of the salary package, unless they are on the minimum wage. If this is the case for you, then your employer may be willing to continue with employer contributions, or offer to pay you the extra 3 per cent directly.

Should you continue to contribute yourself after 65? If you do not need the money, then it makes sense to continue having deductions from your salary going into your KiwiSaver account. It is an effortless way to save.

Once you have turned 65, your funds will no longer be locked in, so you can apply to withdraw some or all of the money at any time (allow up to two weeks for payment). Make sure you are in a scheme (and fund) that suits your risk-profile and retirement plans.

You can still switch schemes after you have turned 65, but once you have closed your account it cannot be reopened.

After 65 you will no longer be eligible to receive the Member Tax Credits which are paid into members' accounts in July each year. If you contribute at least $1042 yourself in the year to June 30, you should receive $510 (or $10 per week until you turn 65) in July 2013, but that will be your last Government top-up.

Most employers will talk to their employees as they approach their 65th birthday, to find out whether they wish to continue with KiwiSaver.

If the day approaches and nothing is said, you should take the initiative and ask them yourself.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her free disclosure statement is available on request by calling 870 3838. The information contained in this article is of a general nature and is not intended to provide personalised advice. If readers have any KiwiSaver questions they would like answered, please go to www.peak.net.nz or email shelley.hanna@peak.net.nz