Changes to the locked section
New legislation came into force at the beginning of April 2019 that affects KiwiSaver schemes and complying superannuation funds like our locked section. Here’s a summary of those changes. First, a couple of changes in terminology:
- ‘Member tax credits’ are now known as ‘government contributions’.
- ‘Contribution holidays’ are now called ‘savings suspensions’.
From 1 April 2019
- The maximum savings suspension period was reduced from five years to one year (although there is still no limit to the number of times you can renew a suspension).
From 1 July 2019
- Eligible employees over the age of 65 will now be able to join and contribute to the locked section. They won’t be eligible for government contributions so, for most members, there won’t be an advantage over belonging to the standard section. However, it may be useful for fixed-term employees who are only eligible to join the locked section.
- The five-year lock-in period for new members over the age of 60 who join UniSaver’s locked section will be removed. This could make joining the locked section more attractive if you’re over 60 and want the opportunity to earn government contributions to your savings. Remember, members of the locked section qualify for government contributions of up to $521 a year up to age 65. Fill in an ‘change contributions form’ if you want to join the locked section.
From 1 April 2020
- Existing members who joined the locked section before 1 July 2019 who would otherwise be prevented from making a retirement withdrawal by the five-year lock-in period may opt out of the five-year lock-in period. Note that a consequence of opting out is that you will cease to be eligible to receive government contributions and compulsory employer contributions.