KiwiSaver – how changes affect New Zealanders

1.  35-year old couple on average household income. Ben and Megan are both 35 years old. Ben works full time and earns $52,000 a year and Megan works part time earning $25,000 a year. Their combined income is equivalent to the average household wage. They join KiwiSaver on 1 April 2013 and both contribute the new minimum rate – 3 per cent of their gross wages. Ben contributes $29.92 a week and his employer contributes 3 per cent, or $24.68 a week after tax. He receives the equivalent of $10 a week in government contributions through the annual Member Tax Credit. Megan contributes $14.38 a week and her employer contributes 3 per cent, or $11.87 a week after tax. She receives the equivalent of $7.19 a week from the Member Tax Credit.  By age 65 Ben and Megan would have combined savings of about $247,500.  This would be enough to provide gross income of about $15,000 a year in retirement over and above the married rate of NZ Superannuation – currently $27,194 a year after tax.

2. 30-year old on average wage Steven is 30 and earns $50,000 – about the average wage. Steven joins KiwiSaver on 1 April 2013 and contributes the new minimum rate of 3 per cent of his gross wage – $28.77 per week. Steven’s employer contributes 3 per cent, or $23.73 a week after tax. He receives the equivalent of $10 a week from the Member Tax Credit. At age 65 Steven would have about $190,000, which would be enough to provide gross income of around $11,500 a year in retirement over and above the single rate of NZ Superannuation – currently $17,676 a year after tax.

3.  18-year old on the minimum wage Blair is 18 and earns just over $27,000 a year – around the minimum wage. Blair joins KiwiSaver on 1 April 2013 and contributes the new minimum rate of 3 per cent of his gross wage – $15.60 a week. Blair’s employer contributes 3 per cent, or $12.87 a week after tax. He receives the equivalent of $7.80 a week from the Member Tax Credit. At age 65 Blair would have about $195,000, which would be enough to provide gross income of more than $11,500 a year in retirement over and above the single rate of NZ Superannuation – currently $17,676 a year after tax.

4.  30-year old couple each earning $45,000, contributing 4 per cent and intending to use the first home buyer subsidy Bechi and Dan are both 30 and each earn $45,000 a year. They both join KiwiSaver on 1 April 2013 and choose to contribute 4 per cent of their gross wage – $34.52 a week each. Their employers contribute 3 per cent, or $21.36 after tax. They each receive the equivalent of $10 a week from the Member Tax Credit. After three years, if Bechi and Dan decided to buy their first home, they may be eligible for a first home deposit subsidy of $3,000 each, which increases to a maximum of $5,000 after five years. They could also withdraw their own contributions, their employers' contributions and their fund returns to buy their first home. After five years they would have about $36,000 available for withdrawal, and if their combined income remained under $100,000, they would also be eligible for the $5,000 deposit subsidy, pushing their total first-home deposit to about $46,000. Assuming they withdrew the maximum amount to buy their first home, at age 65 Bechi and Dan would have a combined balance of about $345,000, which would be enough to provide gross income of about $21,000 a year in retirement over and above the married rate of NZ Superannuation – currently $27,194 a year after tax.

5.  45-year old couple with household income of $120,000 Tama and Lisa are both 45. Tama earns $80,000 a year and Lisa earns $40,000 a year. They both join KiwiSaver on 1 April 2013 and contribute the new minimum rate of 3 per cent of their gross wage. Tama contributes $46.03 a week and his employer contributes 3 per cent, or $32.22 a week after tax. He receives the equivalent of $10 a week from the Member Tax Credit. Lisa contributes $23.01 a week and her employer contributes 3 per cent, or $18.99 a week after tax. She receives the equivalent of $10 a week from the Member Tax Credit.  At age 65 Tama and Lisa would have about $200,000, which would be enough to provide gross income of about $12,000 a year in retirement over and above the married rate of NZ Superannuation – currently $27,194 a year after tax.

6.  35-year old earning $80,000 Matt is 35 and earns $80,000 a year. He joins KiwiSaver on 1 April 2013 and contributes at the new minimum rate of 3 per cent of his gross wage – or $46.03 per week. Matt's employer also contributes 3 per cent, or $32.22 a week after tax. Matt receives the equivalent of $10 a week from the Member Tax Credit. At age 65 Matt would have about $225,000, which would be enough to provide gross income of about $13,500 a year in retirement over and above the single rate of NZ Superannuation – currently $17,676 a year after tax.

7.  40-year old earning $100,000  Lelani is 40 and earns $100,000. She joins KiwiSaver on 1 April 2013 and contributes at the new minimum rate of 3 per cent of her gross wage – $57.53 a week. Lelani's employer contributes 3 per cent, or $38.55 a week after tax. She receives the equivalent of $10 a week from the Member Tax Credit. At age 65 Lelani would have about $212,500, which would be enough to provide gross income of more than $12,500 a year in retirement over and above the single rate of NZ Superannuation – currently $17,676 a year after tax.

8.  50-year old existing member on average wage Emma is 50 and earns $50,000 – about the average wage. She joined KiwiSaver in July 2007 and first contributed 4 per cent of her gross wage. She currently contributes 2 per cent, or $19.18 a week and this is matched by her employer. She also receives the same amount from the Member Tax Credit, which will reduce to the equivalent of $9.59 a week for the year to 30 June 2012 and beyond. From 1 April 2013 Emma's minimum contribution will rise to 3 per cent, or $28.77 a week. Because her contributions rise the amount she receives from the Member Tax Credit will increase to the equivalent of $10 per week. Her employer's contribution will also increase to 3 per cent, or $23.73 a week after tax. At age 65 she would have about $75,000. This would be enough to provide gross income of about $4,500 a year in retirement over and above the single rate of NZ Superannuation – currently $17,676 a year after tax.

9.  30-year old existing member earning $40,000 Nick is 30 and earns $40,000 a year. He joined KiwiSaver in July 2007 and contributes 4 per cent of his gross wage – $30.68 a week. His employer contributes $15.34 a week. He currently receives the equivalent of $20 a week from the Member Tax Credit, which will reduce to the equivalent of $10 a week for the year to 30 June 2012 and beyond. From 1 April 2013, Nick's employer contribution will increase from 2 per cent to 3 per cent, or $18.99 a week after tax. If Nick leaves his contribution rate unchanged, then at age 65 he would have about $215,000. This would be enough to provide gross income of $13,000 a year in retirement over and above the single rate of NZ Superannuation – currently $17,676 a year after tax.

10.  50-year old couple with household income of $100,000 Jeremy and Chloe are both 50. Jeremy earns $75,000 a year, while Chloe works part time and earns $25,000 a year. They both join KiwiSaver on 1 April 2013. As their children have now left home and they have paid off their mortgage, they choose to contribute 8 per cent of their gross wages. Jeremy contributes $115.07 a week. His employer contributes 3 per cent of his gross wage, or $30.21 a week after tax. He receives the equivalent of $10 a week from the Member Tax Credit. Chloe contributes $38.36 a week. Her employer contributes 3 per cent, or $11.87 a week after tax. She receives the equivalent of $10 a week from the Member Tax Credit.    At age 65 Jeremy and Chloe would have combined savings of about $217,500.  This would be enough to provide gross income of about $13,000 a year over and above the married rate of NZ Superannuation – currently $27,194 a year after tax. If Jeremy and Chloe had contributed only 4 per cent of their gross wage, they would have combined savings of about $140,000, or enough to provide additional gross income of about $8,500 a year in retirement.