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What is Kiwisaver and how does it work for self-employed

A man is holding his piggy bank in his hands

Employees in New Zealand have their KiwiSaver handled for them. But it’s easy for business owners to forget about setting themselves up correctly.​ There are also confusions when business owners decide to hire self-employed people (e.g., contractors, freelancers, sole traders), do they need to be registered for kiwisaver. 

In this blog, we answer some of the most common questions on Kiwisaver, from what Kiwisaver is, how Kiwisaver benefits the self-employed people, and Kiwisaver contributions to Kiwisaver withdrawal.

What is Kiwisaver?

It’s New Zealand’s voluntary savings scheme, designed to provide everyone with investments that support their retirement.​

What makes KiwiSaver different from regular investments is that you can’t take money out whenever you like. Besides a few exceptions, it’s restricted until you’re 65 or buying your first home (we’ll take about it in detail later in this blog).​

Long-term investment and savings schemes are truly important. People without long-term savings will one day find themselves living on government Superannuation payments, which are small amounts that cover a “no-frills” lifestyle.​

The catch is that whereas KiwiSaver is automatically deducted from employees’ pay, self-employed folks must set it up for themselves.​

How KiwiSaver benefits the self-employed

If you’re self-employed (working as a sole trader, contractor, or a freelancer), you’re not eligible for some of the employees’ benefits such as getting Kiwisaver employer contributions. However, you still get Kiwisaver government contributions as long as you made the minimum contributions yourself. 

When being self-employed, making contributions to Kiwisaver is voluntary. However, alongside adding structure to your savings, contributing regularly to your KiwiSaver provides a phenomenal benefit. The Kiwisaver government contribution is $521.43 per year whenever you put in at least $1,042.86 yourself. This is the best return on your money you’ll ever make!​

If your partner doesn’t yet have KiwiSaver, get them signed up and contribute the same minimum amount – you’ll each get the Kiwisaver government contribution.

Choosing your level of risk

It’s up to you to decide on a risk profile for your KiwiSaver investments.​

A great rule of thumb is that the further away your retirement is, the higher the level of risk you can take. Taking more risk when you’re young is a good move because history shows us that higher-risk investments deliver better returns in the long run. However, if your retirement isn’t too far off, a conservative risk profile is better. You won’t have as much time for your investments to recover in the case of an economic dip.​


The fees you’re charged for the management of your KiwiSaver fund are generally very low, relative to other funds. The management fees are deducted from your investment, thus, reducing your returns. It’s worth noting that management fees vary between different Kiwisaver providers. You can get guidance on fund types and fees over at Fund Finder.​

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How do I get set up?

If you’re not enrolled in KiwiSaver, you can contact a provider directly (we’ll talk about some of the best Kiwisaver providers in the next few paragraphs). Once you’re enrolled, you can set up a regular payment from your internet banking to your KiwiSaver provider, or manually make lump-sum payments.​

To help your decision-making, we recommend calculating how much you would like to live on during your retirement. There’s a handy tool for figuring that out, here.​

How does it work if I have staff?

Whenever you employ staff, they are typically automatically enrolled into a KiwiSaver scheme (the criteria they need to meet is very minimal). If they choose to stay enrolled, they notify you how much of their pay they’d like to contribute each pay period.​

Your payroll software will automatically include this in the returns made to Inland Revenue.​ If your payroll software doesn’t provide this feature, it’s time to re-think and choose the right payroll software for your business. 

Kiwisaver employer contribution is at a minimum contribution of 3% to each employee who’s enrolled. This is in addition to what you pay them.​

Your employees never see this 3% – it’s sent directly to their KiwiSaver provider and Inland Revenue.​ If you have questions about how Kiwisaver works as an employer,read this guide written by IRD.

It’s worth mentioning that if you’re working with sole traders (contractors or freelancers), they’re not automatically enrolled for Kiwisaver. This means there’s no Kiwisaver employer contribution (you don’t have to contribute to their Kiwisaver funds).

How do I account for my own Kiwisaver?

If you’re an employee of your business receiving PAYE-paid wages, you’re sorted. The business pays its 3% contribution and your personal portion via the payroll system – the same as all other employees.​

If you’re not an employee, or if you’re a sole trader, contributions are personal expenses. Moving funds from the business bank account to your personal KiwiSaver account should be recorded as drawings.​

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What if I want to withdraw my money from Kiwisaver?

Kiwisaver withdrawal is possible when you retire at the age of 65. However, you may be eligible to withdraw your savings from Kiwisaver for your first home.  There are other situations where you need to withdraw early from your Kiwisaver, such as moving overseas, experiencing financial difficulties. You can find out more information on Kiwisaver withdrawal here.

Some of the best Kiwisaver providers

There are several Kiwisaver providers to choose from. However, your Kiwisaver provider will be appointed if you don’t choose one. These default providers are BNZ, Booster, BT Funds (Westpac), Kiwi Wealth, Simplicity, Smartshares (NZX).

There are a number of Kiwisaver providers out there but it’s important to do your due diligence and make informed decisions when choosing the right one. We’ve listed some of the best Kiwisaver providers rated by Canstar:

  • ANZ Kiwisaver Growth Fund
  • Westpac Kiwisaver Conservative Fund
  • ASB Kiwisaver Growth Fund
  • ASB Kiwisaver Conservative Fund
  • Westpac Kiwisaver Growth Fund
  • Fisher Funds Kiwisaver Growth Fund
  • ANZ Kiwisaver Balanced Fund
  • ANZ Kiwisaver Balanced Growth Fund
  • Westpac Kiwisaver Balanced Fund
  • ASB Balanced Fund 

You can find more information on Kiwisaver providers here on IRD’s website.

Other common questions on Kiwisaver

1. What are Kiwisaver rates?

Kiwisaver rates are 3%, 4%, 6%, 8%, or 10% of your pre-tax pay and it’s directly paid to your Kiwisaver providers. 

2. Is Kiwisaver withdrawal taxed?

No, Kiwisaver withdrawal is tax-free. 

3. Can I change my Kiwisaver contribution? 

Yes. You can change your Kiwisaver contribution rate through your employer, myIR, or Kiwisaver provider. And you can change it every 3 months, unless your employer agrees to a shorter time frame. 

4. How will Kiwisaver work if I’ve become employed?

If you have started working as an employee, you should let your employer know you’re contributing to Kiwisaver so it can be deducted from your pay. You may also be eligible for employer contributions.

Who are Beany? 

We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant would. ​

We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.

Jess Heslop

Jess Heslop

I'm an ex-big 4 CA and a technology enthusiast, based in Nelson where I live with my husband and two young children.


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