While NPF members can contribute to both, there is little to be gained by contributing to a Locked-in Scheme and a KiwiSaver scheme. This is because –
- member tax credits are only available on contributions at a rate of 50c per dollar up to a maximum tax credit contribution of $521.43 per year, and
- both the Locked-in Scheme and a KiwiSaver scheme require a minimum member contribution rate of 3% of salary as at 1 December 2013, that will be locked-in until the New Zealand superannuation qualification age.
If a member wishes to contribute more than, say, 6% of their base salary to a scheme, they may wish to consider contributing 3% to a Locked-in Scheme, with the balance of 3% going to an Existing Scheme. Contributions to an Existing Scheme are not locked-in.
In some cases a member who contributes to an Existing Scheme, and whose employer is also contributing to that scheme, could choose to contribute to a Locked-in Scheme or KiwiSaver scheme, and trigger the compulsory employer contribution obligation in relation to the locked-in amount, in addition to their existing employer subsidy.
However, the KiwiSaver Act provides that in relation to members who were employees before 1 April 2008 (and who had access to a registered superannuation scheme as at 17 May 2007), and for whom employer contributions are being made (or were agreed to be made) before 1 April 2008 (which vest within 5 years), those contributions count as compulsory contributions.
In relation to any other members, as the employer contribution rate under the trust deeds for the Pension National and Lump Sum National Schemes is set by agreement between the employer and the member, the additional burden on the employer can be alleviated by the employer agreeing with its employees to reduce the contribution rate to the Existing Scheme. Your employment agreement may also impact on how the compulsory employer contribution obligations are affected in this situation, and your employer is unlikely to agree to pay compulsory employer contributions to a Locked-in Scheme as well as a KiwiSaver Scheme.
It is not possible to transfer an account a member has with a KiwiSaver scheme, to a Locked-in Scheme.