July 1 2012 was the five year anniversary of KiwiSaver. Those who commenced after 1 July 2007, have been in five years and aged 65 (or over) on their anniversary date, are eligible to withdraw (if they wish) from their funds. There will be many people qualifying between now and Christmas.

Those who took advantage and began contributing within a short period of the commencement of the scheme will have at least $10,300 in their accounts if they contributed the minimum requirement of $20 a week to get all the tax advantages. ($1,000 initial incentive, $5,200 contributions, four tax payments of $1,042).

When the scheme commenced for those employed the minimum contribution was 4% of gross salary. In addition some employers contributed more than 2% as a top up. Therefore many balances after five years of contributions will be considerably more than the minimum.

Those that have now qualified to withdraw should be aware that there are several options available to you:

1. You can withdraw the total or some part thereof as soon as possible after due date. It is not necessary to withdraw your total balance all at once.

2. You can stop contributing, do nothing and your funds will continue to grow.

3. You can continue contributing as long as you wish but you do not qualify for any tax incentives due to your having passed the current qualifying age for “retirement” and you have contributed for five years.

4. If still working and you wish to continue contributing your employer (if they are generous) may voluntarily contribute as well. There are no tax incentives for the contributor and the employer will continue to pay tax on the toped up portion to the employee.

5. You can set up a regular payment from your fund as a superannuation scheme. Depending on you balance it is probable that you will be drawing down some capital if you set the regular withdrawal amount too high. These payments are normally regarded as tax paid. However, due to recent developments regarding the definition of “income” from WINZ they may be regarded as income in some circumstances.

Most providers will encourage you to retain your funds with them. Many funds have been performing well such that continued growth should happen due to natural compounding.

Due to legislation since the scheme commenced regarding disclosure and money laundering an application for withdrawal will be subjected to rigorous scrutiny for identification, by all providers. It is understood that compliance rules for providers may make a KiwiSaver withdrawal application considerably longer than a normal security transaction request.

Contact your financial adviser to discuss the best option that suits you if you meet the qualifying criteria.

This article was written by Peter Smith a financial adviser at Kepler Group Dunedin Ltd, the information contained in this column is of a general nature only it is not intended as personalised advice. Email Peter on pete@keplergroup.co.nz

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