What are the proposed changes?
Additional contribution options
Typically the KiwiSaver contribution options have been 3%, 4% and 8%. Although you’ve always been able to make voluntary contributions on top of one of these options, the proposed changes are now bringing in a 6% and 10% option so that you can save more towards your retirement if you choose.
Proposed change: From 1st April 2019, the available contribution rates will be 3%, 4%, 6%, 8% and 10%.
Contribution Holiday changes
The term holiday often brings about thoughts of a nice break or getaway and is probably a bit too positive a word for putting your KiwiSaver contributions on hold. As some people may need to stop their contributions for whatever reason, this option isn’t being removed, it’s just having a name change to ‘Savings Suspension’ so that people realise the gravity of losing money from their savings and don’t use this option unless absolutely necessary.
The amount of time you can suspend your contributions for is also changing – instead of suspending it for five years, the maximum time for this will be reduced to one year. You can suspend it for longer than this, but you’ll need to actively apply each year.
Proposed change: From 1st April 2019, Contributions Holidays will now be called Savings Suspension and will be available for a maximum term of one year before re-application.
Options for people over 60
In the current KiwiSaver scheme, the maximum age that people can join KiwiSaver is 65. This is changing so that people over 65 can also join KiwiSaver if they wish.
If you’re over 60 and you join KiwiSaver after the 1st July 2019, there won’t be a lock-in period – all new members will be able to withdraw their funds after their 65th birthday.
People over 60 who join before 1st July 2019 will still have a 5 year lock-in period in which they won’t be able to access their funds.
Proposed change: From 1st July 2019, people over 65 years old will be able to join KiwiSaver. The 5 year lock-in period will also be removed.
If you’re not sure what these changes mean for you, or you’d like to know more about how KiwiSaver works, talk to your Haven Adviser today!
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