What a Savings Suspension Is
A savings suspension is a formal break from paying into KiwiSaver. It used to be called a contributions holiday, and the old name still appears in a lot of older material. A suspension stops the deduction from your pay — and, unless your employer chooses otherwise, the compulsory employer contribution that goes with it.
It is not a withdrawal and it is not the same thing as hardship. Your account stays open, stays invested, and you stay a KiwiSaver member the whole time.
Who Can Take One
- You have been a contributing member for 12 months or more. You do not have to give a reason — IRD's own wording is that once you have been a contributing member for a year or more, no reason is needed.
- Under 12 months: an early request is possible, but you need to provide evidence of financial hardship. That is the only situation where a reason is required.
- Because membership and contributions run together, the 12-month clock is about having contributed, not simply about having an account.
How Long It Lasts
A suspension runs for 3 months to 1 year — an employee who has contributed and been a member for 12 months or more can take one for anything in that range. As it approaches the end, IRD notifies you, and if you do not apply for another suspension it tells your employer to restart deductions. You can also ask your employer to restart your contributions before the end date on the notice.
How to Apply
- Log in to myIR and go to your KiwiSaver account panel — it is on the homepage once you are logged in.
- Select Apply for a savings suspension and follow the prompts.
- Have ready: your IRD number, your contact details, your employer's business or trade name and address, and evidence of financial hardship if you have not been a member for a year.
If you do not have a myIR account, IRD runs a separate online service for requesting a savings suspension without one. Once IRD approves the request, the suspension starts on the date of approval, and IRD sends a notice showing the start and end dates. Keep that notice — you show it to your employer, and to any new employer if you change jobs. If you lose it, print a copy from myIR or ask IRD to reissue it. If you gave IRD your employer's details, IRD writes to them as well.
What Actually Stops
| Item | During a savings suspension |
|---|---|
| Employee contribution from your pay | Stops |
| Compulsory employer contribution (CEC) | Your employer can stop it |
| ESCT on employer contributions | Your employer can stop paying it |
| Your employer's choice to keep contributing | Allowed — but ESCT still applies to anything they pay |
| Your KiwiSaver membership | Continues |
| Your account staying invested | Continues |
| Your own voluntary contributions | Still allowed at any time |
The employer contribution point surprises people: a savings suspension is a break for both sides. IRD's employer guidance says an employer can still make contributions if it wants to, and that if it does, ESCT is payable on them. If your employer has historically contributed more than the legal minimum, ask whether they intend to keep doing so during your suspension.
What You Keep
- Membership. A suspension does not end your KiwiSaver membership, so it does not reset anything that depends on being a member — including the 3 years' membership test for a first-home withdrawal.
- The government contribution. You can still earn the full $260.72. The entitlement turns on your personal contributions, not on whether your employer is deducting: 25 cents for every dollar you put in, up to $260.72 when your own contributions reach $1,042.86 in the contribution year (1 July to 30 June). A suspension with no personal payments means no government contribution — a suspension with a voluntary top-up still earns it.
- Your fund and your provider. Nothing changes there unless you choose to switch.
Suspension Compared with the Other Options
| Option | What it does | Who it suits |
|---|---|---|
| Savings suspension | Stops contributions for 3–12 months; employer can stop too | The money is needed elsewhere now, or income has dropped |
| Temporary contribution rate reduction | Drops your rate to 3% for 3–12 months; the full 3.5% employer contribution continues | You want relief but do not want to give up the employer match |
| Hardship withdrawal | An actual withdrawal for significant financial hardship | You have a serious, demonstrable financial need |
The middle option is often overlooked and is usually the better one for a temporary squeeze: reducing your own rate to 3% while the employer still contributes 3.5% keeps the free money flowing, whereas a suspension lets the employer's contribution stop too.
You Cannot Chop and Change
You cannot suspend or restart KiwiSaver deductions too often. The minimum period before you can ask for a change — unless your employer agrees to something shorter — is 3 months. The same 3-month minimum applies to changing your contribution rate.
Common Mistakes
- Thinking it is automatic. A suspension only takes effect once IRD approves it and your employer has the notice. Until then, deductions continue.
- Not showing the notice to a new employer. New employees who cannot produce a valid suspension notice must have contributions deducted and employer contributions paid. When the notice does turn up later, IRD refunds the compulsory employer contributions, and the employee has to ask IRD for a refund of passed-on deductions.
- Assuming you lose the government contribution entirely. A voluntary top-up during a suspension still earns the 25% match.
- Confusing a suspension with a withdrawal. No money leaves the scheme in a suspension.
- Letting it lapse by accident. Deductions restart automatically at the end date unless you apply again in time.