Shelley Hanna: No obligation to cease or withdraw funds after 65

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Q. I am a NZ permanent resident and have been enrolled in Kiwi Saver since 2012. I will be 65 in April 2015. I work for a NZ-based company and plan to continue working until 67 years of age. My question is, can I remain in KiwiSaver beyond my 65th birthday? There is nothing in my Collective Employment Agreement forcing me to retire and furthermore my employer contributes 4 per cent of my salary into the fund, which, I imagine, will continue until I retire.

I find your question interesting because of your genuine concern that your KiwiSaver account could close when you turn 65.

In fact, nothing could be further from the truth. While people aged 65 or over can't join KiwiSaver, as long as they are 64 or under when they sign up they can stay in the scheme for as long as they wish.

There are some changes for most people at age 65, however. If they have been in for at least 5 years their funds are unlocked and they can start making withdrawals. As you joined in 2012 your KiwiSaver account cannot be accessed until 2017, or 5 years since you joined. By then you will be 67. That should fit in well with your plans to give up work at that age.

Because you still have 3 years to go to reach the 'age of eligibility' you will continue to receive up to $521 in member tax credits from the Government, as long as your contributions reach or exceed $1042 each year to 30 June. Anyone earning $34,762 or more should achieve this at the minimum contribution of 3%.

Likewise, your employer contributions should continue at least until you have been in the scheme for 5 years. Employers are not obliged to continue making contributions once employees turn 65 and have been a member for more than 5 years, although some employers choose to make voluntary contributions to their employees' KiwiSaver accounts beyond this.

Once you reach the age of eligibility (usually 65 but in your case 67) your account will be unlocked but you will not be obliged to take any money out or close the account. People who whip all their money out thinking that they will 'find a better investment' may be disappointed. With over 200 KiwiSaver funds to choose from, there is a fund for every level of risk from quiet cash to lively international sharemarkets. KiwiSaver schemes are well regulated, you can add or withdraw funds to suit your circumstances, most accounts can be accessed online, and information on the composition and performance of your fund is readily available. You can switch from one scheme to another after the age of eligibility, but if you close your account it cannot be re-opened.

• Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838 or go to www.peak.net.nz. The information contained in this article is of a general nature. Send your KiwiSaver questions to shelley.hanna@peak.net.nz.