National Provident Fund

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Joining a Locked-In Scheme

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  1. Who can join a Locked-in Scheme?

    Any person who was a member of an NPF scheme as at 31 March 1991, who is an employee and who is under New Zealand superannuation qualification age (currently age 65), can join a Locked-in Scheme. However, contributors to NPF’s DBP Contributors Scheme, Aircrew Scheme Annual Single Premium Scheme and Level Premium Scheme must cease contributing to those schemes before being eligible to contribute to the Existing Scheme or the Locked-in Scheme. Copies of the Investment Statements and Application Forms for the Locked-in Schemes are available from the scheme administrator, Datacom, or on our website, www.npf.co.nz

    Existing members (both active and inactive) of NPF’s Pension National and Lump Sum National Schemes (Existing Members) only need to complete an Election Form. A letter and Election Form has been sent to these members advising them of this option. Copies of the Election Form are available from Datacom.

  2. When can members elect to join a Locked-in Scheme?
    Members who meet the criteria set out in question 5 above can elect to join a Locked-in Scheme at any time.
  3. How does a member join a Locked-in Scheme?
    Existing Scheme members can simply complete the Election Form, have the form signed by their employer and send it to the scheme administrator, Datacom.

    Employees who are not Existing Scheme members, but who are eligible to join a Locked-in Scheme nonetheless, will need to obtain an Investment Statement and complete an Application Form. These documents are available from Datacom.
  4. Do employers have to offer Locked-in Schemes to employees (if they are NPF members)?
    Yes. Any member of an Existing Scheme (who is under New Zealand superannuation qualification age) can elect to join a Locked-in Scheme. If a member decides they wish to join a Locked-in Scheme their employer must process the relevant contribution deductions.
  5. What was the start date for the Locked-in Schemes?
    1 July 2007
  6. When will members be able to access contributions into a Locked-in Scheme?
    All contributions (both employee and employer) will be locked in until the New Zealand superannuation qualification age (currently 65 years) or for 5 years after the date when the member first became a member of the Locked-in Scheme (and/or of another complying superannuation fund or KiwiSaver scheme), whichever is later.
  7. Are members able to make early withdrawals from a Locked-in Scheme?
    You can apply for an early withdrawal of all your account in the Locked-in Scheme in certain circumstances, e.g. in the case of first home purchases (or sometimes a second or subsequent home purchase), significant financial hardship, serious illness and permanent emigration. In each case, the Board may in its discretion permit the withdrawal if satisfied that, had you been member of a KiwiSaver Scheme, you would have been permitted to make the withdrawal.

    In the case of permanent emigration, you can apply to have your locked-in savings transferred to a recognised overseas superannuation scheme, or, 12 months after you emigrate, you can apply to withdraw those savings from your locked-in account.

    Note that there are restrictions on withdrawal of member tax credit contributions. Member tax credit contributions (ignoring earnings on those tax credits) can only be withdrawn before New Zealand superannuation qualification age in cases of serious illness. If you withdraw (or transfer) your locked-in savings following permanent emigration, tax credits are forfeited and repaid to the Inland Revenue. This differs from the position for a KiwiSaver Scheme, where on permanent emigration to Australia, tax credits are not forfeited.

    If you die then your locked-in savings will be payable to your estate.
  8. Can a member take a break from making contributions into the Locked-in Scheme?
    After a member has been contributing to the Locked-in Scheme for 24 months they can apply for a savings break, called a contributions holiday, of between 3 months and 5 years. There is no limit to the number of times members can take contributions holidays. If members take contributions holidays, they can still make lump sum payments.
  9. If an employee joins a Locked-in Scheme, can they continue to contribute to their Existing Scheme?
    Yes, employees may contribute to two NPF schemes at the same time. However, employer contributions to an Existing Scheme are likely to discharge an employer’s contribution obligation entirely (meaning the employer is not also required to contribute to the Locked-in Scheme.
  10. What happens to a member’s Locked-in account if they change employment?
    The member will need to ask their new employer to process their contributions into their Locked-in Scheme via payroll.
  11. How much time and cost is involved for the employer in providing the Locked-in Schemes to employees?

    NPF and Datacom have worked hard to ensure the process involved for the employer is as simple and easy as possible. The employer is responsible for providing accurate information about the employer and employee contributions to Datacom including:

    - clearly identifying which Schemes the contributions are being deposited into;
    and
    - paying the correct tax on contributions.

  12. Do employers have to make compulsory matching payments into their employees’ Locked-in Schemes?
    Except in certain circumstances (see question 17 below), your employer is required to contribute 3% of your base salary.
  13. Will the payments employers already make into their employees’ existing NPF schemes count towards the compulsory payments employers are required to make into their employees’ Locked-in Schemes?

    For employees employed before 1 April 2008 (who had access to an NPF scheme as at 17 May 2007):
    - where the employer is making or has agreed to make contributions to that scheme for the employee before 1 April 2008, and
    - the contributions vest in the employee within a period of 5 years from the date membership commenced (which is the case in the Existing Schemes and the Locked-in Schemes)

    those employer contributions count as compulsory employer contributions.