What is KiwiSaver and how does it work?

2min read
Posted 08 July 21

If you're here, you've probably at least heard of KiwiSaver. But did you know you may already have one — depending on your work contract? Most employers will include your KiwiSaver forms in your agreement when you sign, and it's easier for them to sort it out straight away because they have to invest money in you if you're on KiwiSaver.

Still uncertain what you may have signed up to get? Here we'll take you through everything KiwiSaver, from how to get on one to how much you can potentially save.


First off, what is KiwiSaver?

KiwiSaver is a voluntary government scheme that sets aside a little from your paycheque weekly. This is to help you save up for those two significant life events buying a house and saving for retirement.

Think of it like locking your money in a piggy bank. You can put money in, but you'll need a key to get it out. For KiwiSaver, the keys are either purchasing a house or beginning retirement.


Am I on KiwiSaver?

Even if you weren't aware, you would have likely seen a KiwiSaver form when signing your employment contract. So, unless you're contracting, freelancing or volunteering, your employer is legally required to contribute 3% to your KiwiSaver.


KiwiSaver do the percentages mean?

When you start KiwiSaver, you agree to set aside a little with every paycheque, based on a percentage of your wage. Usually that’s set at 3%, 4%, 6%, 8% or 10% of your total earnings. Your employer then has to match at least 3% of those earnings from the company' you work for to help you save.

If you're feeling a bit unsure about what you signed up to, or even if you signed up at all, have a chat with your employer. 

You're free to opt-out or change the rate of your KiwiSaver every three months. Or, if you're new to the job, you can quit your KiwiSaver any time between weeks 2 and 8 of starting your career. 

We can't legally tell you what to do, but if you want to save up quickly for a house, it might be a good idea to take out a higher KiwiSaver rate. We cover what that all means and what you can take out in our blog about accessing your KiwiSaver. 


Can I access my KiwiSaver if I'm low on funds?

KiwiSaver exists to help you save and get your life on track. So, while it's a serious commitment, the rules are pretty lenient if you're in a tight spot. To get money out for anything other than a house or retirement, you need to be able to prove:

  • You can't meet minimum living expenses.
  • You can't pay your mortgage.
  • You need medical treatment for yourself or your family.
  • You need to modify your home for your unique needs or a dependent family member.
  • Or that you need to meet funeral costs for a dependent family member.


Can I take a break from KiwiSaver?

You don't have to quit KiwiSaver because you're short on funds.

If you feel like you're likely to need that extra spending money, you can apply for a savings suspension. But it has to be for reasons of financial hardship during the first 12 months you're on KiwiSaver. After that, you can suspend your savings whenever you like.


In short.

It's pretty scary to suddenly find your wages tied up in something you might not have known about. But, if you have been or are now thinking about a KiwiSaver, the thing to remember is it's still your money. All a KiwiSaver does is limit what you can do with it a bit like getting a gift card, which is only redeemable at certain stores. If you let your savings accumulate, you can quickly see some serious savings.




Info and tools on the Yonda website are used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.