Q I work for a Government department. I joined KiwiSaver four years ago, when I was 61. When I turned 65 last month to my surprise they stopped passing on my KiwiSaver contributions, and their employer contributions also stopped. Am I right in thinking that both contributions should continue until I am eligible to withdraw, which in my case will be age 66?
A You would think that a Government department would have good knowledge of the KiwiSaver rules, but in your case it appears not.
The Government has set up a dedicated KiwiSaver website at www.kiwisaver.govt.nz which sets out the rules of the Scheme. Looking at the rules around employer contributions, there are only a few situations where employers are not obliged to contribute at least two per cent to all employees who are contributing KiwiSaver members. One of the few exceptions is if "you are over 65 years of age or have been a member of KiwiSaver for five years, whichever date is later". (The other exceptions are if you are under 18, on a contributions holiday, or they are contributing to another eligible, registered superannuation scheme). So there in black and white you have it, in your case the employer contributions should continue beyond 65 as your five year date of joining is the later event.
Ideally, all employers should keep a record of the date that each employee joined KiwiSaver. This information is also held by Inland Revenue. It is an important date, as once a member reaches the age of 65 and the five-year milestone (whichever is the later, of course) then they can stop their employer contributions. Some employers may choose to continue, but the employee should be aware that they are doing so out of generosity. So there should be some sort of discussion at this point, and this would occur with all their employees as they reach that milestone.
As we are only now arriving at the point at which some members aged 65 or over can access their KiwiSaver, I can see that there is going to be confusion on both sides as they nut out the details of what happens next.
As far as your contributions go, of course these should also continue until you have been in the Scheme for five years. Once you are eligible to withdraw from the Scheme, your employer should ask you whether you wish to continue making contributions. You will no longer be eligible for Member Tax Credits, but if you haven't missed the money and think that it is an easy way to save, then there is no reason to stop.
I hope your employer sorts out their procedures promptly. You may need to turn to Inland Revenue or your fund manager to support your case. Once your rights are established, your employer should retrospectively reimburse you for the missing employer contributions.
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email firstname.lastname@example.org.