KiwiSaver, Shelley Hanna: No top up after 65

Changes made to KiwiSaver mean there will be no top up after age 65.

Q I am a school teacher aged 62. I have been a member of the teachers' super scheme since I started teaching in the 80s and I have never joined KiwiSaver. If I join now and contribute 3 per cent of my salary, will I get the government top up for five years, or just to age 65?

A With the introduction of KiwiSaver, government super schemes like yours were closed to new members, but existing members like you can continue with their contributions. The good news is that you can be a member of both schemes. KiwiSaver members over 18 and under 65 receive annual Member Tax Credits of up to $521 based on how much they contribute — members of the teachers' super scheme do not get this top up. You can make employee contributions to both schemes (if you choose), but employer contributions will only be paid to one scheme.

The rules for new KiwiSaver members over 60 changed from July 1, 2019. Before that date, a member aged 60 to 64 could join and receive the government contribution for five years, as long as they contributed up to $1042 over the KiwiSaver year. Employer contributions also continued for five years. At the end of five years, those contributions stopped and members could withdraw their savings if they wished.

From July 1, 2019 the age restriction on joining was removed. Anyone entitled to live in New Zealand permanently can now join KiwiSaver no matter what their age.

Now someone like you who joins KiwiSaver after July 1, 2019 will only get the government contribution until they turn 65. Their employer is also only obliged to make employer contributions until you turn 65. As you are now 62, you could receive the equivalent of $10 per week to age 65 from the government, if you contribute $20 per week or more.

Existing members in this age bracket should take note that the lock-in rules changed for those in the 60-64 age bracket who joined prior to July 1, 2019. Now when you turn 65, you can choose if you wish to continue with government and employer contributions or if you would like access to your savings.

If these members advise their provider (after they turn 65) that they want to opt out of the lock-in period they can. Their entitlement to the government contribution and compulsory employer contributions will cease from the day before they advise their provider of this decision. This may be helpful to some members whose financial situation has worsened since Covid-19.

There have been multiple changes to KiwiSaver since 2007. Members in this age bracket should talk to their provider or get advice from an authorised financial adviser if they are uncertain of their entitlement.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06 870 3838 or go to www.peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz