KiwiSaver end-payment date

2012 KiwiSaver amendments clarify contributions and withdrawals when a member reaches their end-payment date, and their funds are no longer locked-in.

Sections 4, 22, 62, 112B and clauses 3 and 4 of schedule 1 of the KiwiSaver Act 2006

Amendments have been made to the KiwiSaver Act 2006 to clarify aspects of contributions and withdrawals when a member reaches their end-payment date, and their KiwiSaver accumulated funds are no longer locked-in.

Key features

  • The start date for employees who are enrolled in KiwiSaver by their employers is clarified to be the 15th of the month in which the employee's first KiwiSaver contribution is deducted, for the purposes of calculating the five-year minimum membership period before a member reaches their end payment date.
  • Employees who have reached their end payment date can cease having employee contributions deducted simply by providing their employer with a "non-deduction notice" to cease deductions. Employees who wish to continue contributing to KiwiSaver through direct employer deductions from their salary and wages can still do so.

Detailed analysis

Membership start date

Under the standard withdrawal provisions, a member's KiwiSaver funds are locked in until the later of the date on which the member turns 65, or five years from the start of membership (the "5-year qualification date").

For members who join KiwiSaver by signing up directly with a provider, the date on which they become a KiwiSaver member is established when they sign up.

However, under the KiwiSaver Act employees can also join KiwiSaver via their employer, either by being automatically enrolled as a new employee or by giving their employer a deduction notice. For the purposes of determining when KiwiSaver membership started, the date on which the employee's KiwiSaver contributions began is the relevant factor. The changes to clause 4, schedule 1 of the KiwiSaver Act 2006 clarify this position.

Clause 4 now provides for a "5-year qualification date" for members who enrol into KiwiSaver via their employer. This has been standardised to be calculated from the 15th day of the month in which the first employee contribution is deducted by the employer. This standardisation of the date to the 15th the month aligns with the date Inland Revenue currently treats KiwiSaver employee contributions as received for other purposes.

Employee contributions post end-payment date

KiwiSaver members who have reached their end-payment date may choose to remain in KiwiSaver. They may be able to access their accumulated funds by making partial withdrawals while keeping their KiwiSaver accounts open.

KiwiSaver members may also choose to continue to make contributions to KiwiSaver, although these contributions will no longer attract the Crown's annual contribution (member tax credit).

Members who are still employed may continue to have employee contributions deducted from their salary and wages.

However some members may choose to stop making regular employee contributions once they have reached their end-payment date, because they have access to their KiwiSaver funds. New section 112B of the KiwiSaver Act 2006 enables these employees to give their employer a "non-deduction notice" directing their employer to cease to deduct employee contributions.

Employers should cease deducting employee contributions from the first payment of salary and wages after the non-deduction notice is received.

Employees may request their employers to start deducting employee contributions again at a later date, by providing a KiwiSaver deduction notice (KS2). An employee cannot provide a KiwiSaver deduction notice within three months of asking their employer to cease deductions via a non-deduction notice, unless the employer agrees.

Application date

The changes apply from 1 July 2012, being the earliest possible date on which members could reach their end-payment date.