Getting a Retirement Income in New Zealand

There is a variety of ways of generating an income for your retirement in New Zealand.

I Did It My Way

Many New Zealanders hope to buy a second home with the intention that before retiring they will pay off the mortgage. This is done using a combination of rent paid by the house's tenants plus, if necessary, earnings from their job. When they retire, the rental income from the house acts as a potentially inflation-proof pension.

Other investments such as the stock market might be substituted for housing, but housing is the most popular method of self-saving for a retirement income in New Zealand.

Retirement can also be funded in more official ways:

Government Superannuation

The government pays a pension, called superannuation, to all eligible people in New Zealand aged 65 or over. To be eligible you do not need to be a New Zealand citizen. You can read more details about superannuation eligibility on our retiring to New Zealand page.

New Zealand Superannuation is currently worth $18,954 gross per annum if you're single or $14,228.76 gross for each person in a married/civil union/de facto couple.

Superannuation is part of your taxable income. The amount you are paid will be reduced by income tax levied at your normal rate.

New Zealand Superannuation is maintained between 65% and 72.5% of average full-time net earnings.

KiwiSaver

KiwiSaver is a government backed, voluntary, savings plan to help you save further for retirement. The key points for savers are:
  • The government contributes $1,000 (tax-free) to each member's savings when they join KiwiSaver for the first time.
  • Your KiwiSaver payments are processed by the Inland Revenue.
  • Each member of KiwiSaver aged 18 or over receives an annual tax credit of up to $20 a week ($1,042.86 a year) to match their own savings into the scheme.
  • You can choose to contribute 2%, 4% or 8% of your gross wage to KiwiSaver.
  • You are entitled to a compulsory employer contribution to your KiwiSaver account at a minimum of 2% of your gross salary. If your employer does not contribute to Kiwisaver, they must pay the 2% into a government approved fund for your retirement.
  • Your employer can voluntarily pay more than 2% into Kiwisaver, matching your contribution of 4% or 8% of gross salary.
  • The Inland Revenue passes your payments plus tax credit to your chosen KiwiSaver scheme provider. If you don't choose a provider, your payments will automatically be invested by one of the default providers:
    • AMP Services (NZ) Limited
    • ASB Group Investments Limited
    • AXA New Zealand (National Mutual Corporate Superannuation Services Limited)
    • ING (NZ) Limited
    • Mercer (NZ) Limited
    • TOWER Employee Benefits Limited
  • KiwiSaver providers charge fees, so do your homework by comparing the fees and make sure you're not paying too much. Many providers do charge what seem like very high fees indeed (over 5%).
  • You can choose to allocate your KiwiSaver money to funds that can be described as conservative, moderate, balanced, or growth.
  • Once you have been investing in KiwiSaver for at least 12 months, you can stop making payments.
  • At age 65 you may withdraw your funds in the form of a lump sum. Some providers may offer you other options such as an annuity or regular withdrawals. You can calculate roughly how big your lump sum will be.
  • Withdrawals from your KiwiSaver account are tax-free.
  • If you join KiwiSaver between the age of 60 and 65, you'll be able to access your savings after five years.