KEY POINTS:
Kiwisaver is designed by the Government to encourage New Zealanders to save for their future and, in particular, retirement. The initiative is voluntary for individuals and incorporates many world-first policy and design features that mean it will be closely watched and scrutinised in New Zealand and overseas.
But
the latest quarterly ASB Investor Confidence survey shows just two thirds of people with investments are aware of KiwiSaver. Only half of those under 30 know what it is.
KiwiSaver will be launched on July 1 next year. For more information, go to: www.kiwisaver.govt.nz
INDIVIDUALS
Can anyone have a KiwiSaver account?
From July 1 next year, if you start a new job and are aged 18-65 you will be automatically enrolled in a KiwiSaver scheme, unless you opt out within the first eight weeks. There are some exceptions, in particular, if you are casual worker on a contract for less than 28 days.
KiwiSaver is open to everyone, so existing employees or self-employed people can also opt in. You can choose to put either 4 per cent or 8 per cent of your gross salary into your KiwiSaver account. Voluntary payments can also be made directly to Inland Revenue.
What happens to the money?
The Government will give you $1,000 in your KiwiSaver account, and will contribute towards your fees.
You can have only one KiwiSaver account and the savings will be locked in until you are 65 unless you:
* die
* suffer significant financial hardship or serious illness
* emigrate
* use the funds to buy your first home.
How do I choose a KiwiSaver scheme?
A range of schemes will be available, offering a variety of investment options from conservative to growth funds, so you can find an option that best suits you. You can choose your own scheme (there is a default option if you can't decide) and you can change schemes at any time. The scheme will have built-in flexibility so that after 12 months you can apply to Inland Revenue for a contributions holiday of up to five years.
What is the first home subsidy?
After three years, you can put your savings towards your first home and you may also be eligible to receive a housing subsidy (of $3000-$5000) to add to your savings. So if you opt into KiwiSaver in July next year, the Government could give you $3000 after July 2010, $4000 after the following July, or $5000 after July 2012.
EMPLOYERS
Inland Revenue will send each employer an information pack.
What are employers accountable for in relation to their employees?
Employers have to enrol all eligible new employees (and any existing employees who choose to join ) into KiwiSaver.
You will need to hand out an information pack (supplied by Inland Revenue) to employees and send their name and address details to Inland Revenue.
You will also need to:
* deduct KiwiSaver contributions from employees' pay
* act on "opt out" requests and send them to Inland Revenue monthly
* make refunds if contributions have not been sent to Inland Revenue.
Do I have to make contributions towards my employees' KiwiSaver accounts?
No, but if you wish to, you can. There is a specified superannuation contribution withholding tax (SSCWT) exemption on employer contributions (the lesser of the employee contribution or 4 per cent of the employee's gross wages).
What if I already have an existing superannuation scheme for my employees?
You can either continue to operate it independently of KiwiSaver, convert it to a KiwiSaver scheme or establish a KiwiSaver scheme within your existing one. Scheme Providers Scheme providers will play a fundamental role in KiwiSaver, offering a range of products to help New Zealanders save for the future.
What will a scheme provider do for me?
Among other things, a scheme provider will:
* administer your KiwiSaver scheme
* invest your contributions
* work with Inland Revenue
* market schemes to the public.
They, rather than Inland Revenue, will have the primary relationship with savers.
How will providers be selected?
The Ministry of Economic Development is managing the tender process (the tender process is now closed). All providers will be certified by Inland Revenue and registered with the Government Actuary.
