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What is a Kiwisaver? A Guide for Expats

What is a Kiwisaver? A Guide for Expats

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

This article is here for general informational purposes only, and the facts might have changed since we wrote it.


Not only are we going to look into what is a Kiwisaver, today we’re also going to talk about if you’re eligible for it, among other things.

Kiwisaver is a retirement fund that is entirely voluntary and is administered by the New Zealand government.

If you are a citizen of New Zealand, a permanent resident, or have a residence class visa, you can contribute to this fund. If you choose to participate, you will make a pretax contribution of either 3%, 4%, 6%, 8%, or 10% of your gross pay. If you don’t set your own contribution rate, your employer will subtract the default rate of 3% from your salary. 

If you are in the country on a visiting, work, student, or temporary visa, you are unable to enroll in the Kiwisaver program.

There are several different entry points available for the Kiwisaver program. You have the option of enrolling directly with a scheme provider or enrolling through your employer, depending on your circumstances. You must sign up for Kiwisaver through a plan provider if you are younger than 18 years old since I t is not possible to join through your place of employment.

If you are 16 or 17, your application must have the co-signatory approval of at least one legal guardian. If you don’t have a legal guardian, you should get in touch with the supplier of the Kiwisaver scheme you have chosen. If you are under the age of 16, you need the permission of both of your parents or guardians since you cannot enlist yourself.

What is a Kiwisaver for Those Belonging to a Trust, Partnership, or Are an Employee Shareholder

You can join Kiwisaver by joining directly with a provider or indirectly through your firm’s payroll if your firm operates through a trust, partnership, or company. The same applies and if you are paid a salary or wage from which PAYE (pay as you earn) is subtracted. 

You are able to enroll in Kiwisaver directly through a provider even if you are not paid a salary or wage that has PAYE deducted from it. It’s possible that the company that manages your Kiwisaver account will provide you access to a variety of investment options to choose from. The funds will each have a unique level of potential loss as well as potential gain.

After enrolling in Kiwisaver, you will always have the option to switch the fund that you have chosen.

What is a Kiwisaver Scheme NZ dollars
New Zealand dollars. Image from farmersweekly

What is a Kiwisaver Scheme?

A Kiwisaver scheme is a selection of different funds from which to pick, with a wide variety of financial products available to meet your requirements, whether you are just starting out in the workforce or getting close to retirement age.

You can select your fund from among the options provided by a Kiwisaver scheme provider, and you are free to move at any time. You are not required to continue working with a default provider or the provider that your company has chosen for you.

Regulation of Kiwisaver schemes is handled by the Financial Markets Authority in a manner analogous to that of regulation of other registered superannuation schemes.

If you were automatically enrolled in a plan by your employer, you will already be enrolled in a default scheme. The government will then send you the product disclosure form for the scheme you are enrolled in, which includes data about the scheme, including the investments and charges.

You will be sent a statement in the event that you enrolled through the provider directly or if your company participates in their own Kiwisaver plan.

All de facto Kiwisaver schemes are required to have fees that are reasonable, have a special agreement with the government that requires them to meet additional reporting requirements, and have their operations and default investment funds closely monitored. These measures are taken to ensure that Kiwisaver schemes are competitive and that members’ best interests are protected.

Unlike other financial products, investments in Kiwisaver are not backed by the government. You are in charge of your own investments, each of which carries a different degree of potential risks.

What is a Kiwisaver: Choosing the Most Suitable Plan

Kiwisaver product disclosure statements provide information regarding the specific rules, fees, terms, and conditions of the scheme, as well as who is accountable for overseeing your funds, how your funds will be invested, and their strategy for responsible investing, which includes their environmental and social considerations.

As soon as you sign up for Kiwisaver, the primary relationship you will have is with the firm that manages your Kiwisaver account.

What is a Kiwisaver: Participating as an Employee

If you are eligible for Kiwisaver, your employer will enroll you in the program once you start a new job, provided that you meet the following criteria:

  • you are between 18 and 65 years old 
  • you are on a full-time or permanent part-time employment
  • you are on an agreement of over 28 days
  • you are an informal agricultural worker for over three months
  • you are not yet a member of Kiwisaver

If you do not become registered in the Kiwisaver program automatically, you have the option of enrolling by asking your employer to do so or by signing up with a Kiwisaver provider on your own.

You have the ability to select the percentage that will be deducted from your Kiwisaver account, which can be three percent, four percent, six percent, eight percent, or 10 percent.

If you do not select a rate, your employer will automatically withhold 3 percent from your pay, starting from your very first paycheck. Your employer will also be required to make payments, and you will have a period of eight weeks to decide whether or not you would like to participate in the Kiwisaver program. You have the option to withdraw from the Kiwisaver scheme if you do not wish to be a participant.

When the government receives the information about your deductions from your company, they will enroll you in either one of the nine default Kiwisaver providers or, if your firm has a scheme of their own, the one that they have chosen for their employees.

At any point in time, you are free to select a new scheme to replace the one that you now participate in. Simply get in touch with the provider of the scheme that you choose, and they will make the necessary arrangements for you to transfer into their program.

What is a Kiwisaver expat workers
Expat workers in New Zealand. Image by immigration.govt.nz

Are there exceptions to the automatic enrollment in Kiwisaver?

Yes, there are certain conditions that will exempt you from being automatically enrolled in Kiwisaver, such as:

  • you are under the age of 18 or above the age of 65
  • you work in agriculture in a casual capacity
  • you work on election day
  • you are a private hired help and you settle your own PAYE
  • if you are working under a temporary basis for less than 28 days; nevertheless, if the term is lengthened to beyond 28 days, you will be automatically registered on the 29th day
  • you are a casual worker who obtains holiday pay with your salaries
  • you are on a parental leave with pay or accident compensation
  • you remain on the same payroll amid a business merger and acquisition
  • you relocate with the same employer, that is, moving to another business unit
  • you only get schedular payments
  • you are not mandated to have PAYE deductions taken out from your wages
  • you return to a business you were seconded from immediately after your secondment concludes
  • you are currently working as a teacher but wish to shift to another state or state integrated school
  • you are working abroad under the New Zealand State Services 
  • you are a shareholder employee and your pay is exempt from PAYE

What is a Kiwisaver: Choosing Not to Participate

If you have already been automatically enrolled in Kiwisaver but have decided that you do not wish to remain a member of the program, you have the option to opt out between the end of the second week of work and the eighth week of work. This must have occurred on day 14 or later, but not later than day 56.

If you do not choose to withdraw out of Kiwisaver, you will continue to be a member of the program, and your employer will keep deducting contributions from your paycheck.

Late withdrawals can be acknowledged even after eight weeks and up to three months after your first contribution has been received if any of the following conditions are met:

  • your employer did not hand you over a Kiwisaver employee information pack, or KS3, within a week of you starting your job
  • the government failed to issue a product disclosure statement to you for the default Kiwisaver scheme you were allocated to
  • your employer failed to provide you with a product disclosure statement for the Kiwisaver scheme they chose
  • events that you have no control over rendered you unable to opt out on time

If you are under the age of 19 and want to opt out of Kiwisaver

You may be able to do so in the following circumstances:

  • your employer mistakenly enrolled you in Kiwisaver before your 18th birthday
  • you were inaccurately enrolled and didn’t secure your guardians’ consent

You may not be able to withdraw from Kiwisaver if any of the following applies to you:

  • you approached a provider and selected your own investment scheme
  • your parents or legal guardians enrolled you in Kiwisaver or gave their consent for you to do so
  • you directly opted in as soon as you turned 18 years old

If you directly enrolled with a Kiwisaver provider 

If you joined Kiwisaver directly through a provider, you will not be capable of opting out of the program; however, you may be able to temporarily suspend your contributions.

What is a Kiwisaver: For Existing Employees

You should talk to your company about getting a KS3 form, and you should also fill up the Kiwisaver deduction KS2 form. If you give it to your employer, they will begin collecting your Kiwisaver contributions from your wages beginning with the next pay period. You also have the option to sign up with a supplier directly. If you connect directly with a provider or opt in, you will not be able to leave the program at a later time.

Kiwisaver for Those Whose Employer is More Than One

  • Select which of your current employers to have deductions made from if you’re working for more than one when you enrolled in Kiwisaver. Any new employers you work for after joining must also make deductions.
  • If you begin working a second job, contributions must be deducted from it in addition to your primary job. All of your employers must make these contributions.

If you held numerous jobs before enrolling in Kiwisaver, deductions are only necessary from the job that you started on the day of enrollment if you were automatically registered, or the job you designated if you chose to participate voluntarily.

If you work more than one job after enrolling in Kiwisaver, deductions must be made from any new jobs you start since then. To halt necessary deductions from each job, you can request a Kiwisaver savings freeze.

Overall, if your pay is being withheld, your employer will also be required to make the employer payments.

Single Employer, Two Jobs

No matter whether the salary or wages are for many positions under the same employer, Kiwisaver deductions are made from the total gross pay made by that firm.

Any terms and conditions will have to be approved by both you and your Kiwisaver provider. You have two options for contributing to Kiwisaver: either via the government or straight to your provider. Use your internet banking’s pay tax option and choose Kiwisaver if you’re sending your Kiwisaver contributions to the government. You can also configure automatic payments.

 You are always free to alter your contribution rate. You can talk to your provider about modifying the rate of your contribution based on the one that best suits your needs.

You will be required to have deductions made from your pay once you begin receiving a salary or wages. Once you inform your employer that you participate in Kiwisaver, they will begin deducting payments.

What is a Kiwisaver: For Retirement Savings 

You can check your retirement or superannuation plans against Kiwisaver before deciding whether to sign up, if you’re started saving for retirement. 

The advantages and regulations of your current retirement or superannuation plan are comparable to Kiwisaver if the former is a complying fund. To know whether your plan is deemed a complying fund, you can always consult with your provider. 

You might not be eligible for a second employer contribution to your Kiwisaver plan if your employer already pays into your other scheme, since it may reduce the mandatory employer contribution they must make.

What is a Kiwisaver for retirement
Saving for your retirement. Getty Images

What is a Kiwisaver: How to Get Your  Funds When You Move Abroad

Transferring to Australia

You can move your Kiwisaver savings to a superannuation plan in Australia if you relocate permanently to that country. However, you are not required to move your Kiwisaver funds to Australia.

Should you choose to transfer your Kiwisaver funds, get in touch with your Kiwisaver provider to guide you.

Relocating to Other Territories

You are eligible to withdraw the majority of your savings from your Kiwisaver account after living abroad – outside of Australia – for a year.

You could withdraw your payments, those made by your employer, fee waivers, as well as interest you have accumulated. The government contributions, however, are not withdrawable.

To transfer your Kiwisaver funds to an authorized overseas superannuation plan, you can submit an application to your scheme provider.

What is a Kiwisaver: For US Expats

Just like US expats everywhere, US nationals who reside in New Zealand are in the unusual position of having potential tax and reporting requirements in both their country of residence (New Zealand) and their country of origin (the US). The tax status of a US citizen living in New Zealand may be more complicated than the usual taxpayer because of this in regards to income, assets, businesses, and activities.

An evaluation of the scheme’s characteristics is necessary before determining how owning a Kiwisaver would affect your US tax situation. Some claim that a Kiwisaver should be treated as a wrapper with no entity status for US tax reasons, even though it has tax-advantaged status in New Zealand.

In this scenario, any investment made by the Kiwisaver would be regarded as a direct investment made by the plan owner, exposing the plan’s returns to existing US taxations. 

This direct  investment could be especially unfavorable tax-wise if, say, it were to be categorized as a passive foreign investment company (PFIC) for US tax reasons. This is because, minus certain elections, the excess payouts and dispositions of PFICs are levied at the greatest marginal rate on top of an extra interest fee.

A Kiwisaver could also be viewed as something more akin to a foreign trust, a category that has its own set of complications. Briefly put, if a Kiwisaver were deemed a non-grantor foreign trust, then the fund’s gains would not be subject to taxation until they were delivered to the plan’s owner.

If the Kiwisaver were categorized as a grantor trust, on the other hand, it would effectively be considered as transparent, with comparable tax ramifications to those under the wrapper definition we mentioned earlier.

The underlying investments may necessitate further tax reporting under the wrapper concept. To illustrate, in the case of a PFIC investment, an Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund (Form 8621) would typically be expected.

According to the trust’s (non-grantor) viewpoint, a payout from the Kiwisaver fund to the holder would likely need the filing of an Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts (Form 3520).

A Form 3520 and an Annual Information Return of Foreign Trust with a US Owne Form 3520-A will likely be needed each year in accordance with the trust (grantor) concept. 

The applicability of IRS Revenue Procedure 2020-17, which precludes some foreign retirement savings plans from trust reporting, to Kiwisavers should also be taken into account.

Kiwisavers should be disclosed on both the Foreign Bank and Financial Accounts (FBAR) and the Foreign Account Tax Compliance Act (FATCA) (Form 8938), if the person fulfills the criteria that require them to file one or both forms, in addition to the entity-related tax reporting duties mentioned above.

In many cases, the Kiwisaver fund might be regarded as a PFIC for US tax reasons. PFICs may have negative tax consequences since excess distributions are subject to the highest marginal rate of taxation as well as interest charges, as mentioned prior. Additional filing obligations are also produced by PFICs.

The investments that can be executed under a Kiwisaver account range in type, with some of them being New Zealand mutual funds. You would be subject to PFIC classification on the US end if the Kiwisaver is a mutual fund.

Upon your set up of a saver fund and make an investment that doesn’t fit the criteria of a PFIC, it is important to consider exactly what type of investment you are making.

What is a Kiwisaver: Benefits

Say, you managed to sidestep the foreign trust filing obligations, have you gained anything by having this sort of account?

You are still in a more robust position globally from a tax perspective compared to when you started, even though the employer contributions may not appear worthy of the filing. It makes sense to save on the New Zealand end by putting money in the Kiwisaver because New Zealand taxes are released more frequently and at a higher tax rate than in the US. More so, the tax savings from New Zealand may still be more than the US filing fees.

Kiwisaver for Expats: The Bottom Line

If you’re an eligible expat in New Zealand, having a Kiwisaver can definitely provide you with certain advantages as was discussed above. Besides, there are still chances for you to withdraw from it should you end up changing your mind.  

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.

This website is not designed for American resident readers, or for people from any country where buying investments or distributing such information is illegal. This website is not a solicitation to invest, nor tax, legal, financial or investment advice. We only deal with investors who are expats or high-net-worth/self-certified  individuals, on a non-solicitation basis. Not for the retail market.



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