If you don’t feel like you’re totally clued up on KiwiSaver- don’t fret, many of us aren’t. Read about the basics here.
The government is willing to put $521 of cold hard cash into each of our KiwiSaver accounts, every single year. Unfortunately, thousands of Kiwis leave this money unclaimed.
It’s called a ‘Member Tax Credit’ – which is a weird name considering it has nothing to do with tax, it’s literally free cash in to your KiwiSaver account, once a year.
There’s no catch. This is just the government’s way of encouraging New Zealander’s to put money into KiwiSaver.
Over $1 Billion has been left unclaimed by Kiwis over the last three years.
A 25 year old, receiving the extra $521 each year would equate to an extra $20,840 by the time they can withdraw their funds at age 65. And this doesn’t even take in to account interest earned on the money over that period.
How to make sure you get your cash
For every $1 you put in to your KiwiSaver account, the government will contribute 50 cents, up to $521, every single year.
That means you only need to invest $1,043 into your KiwiSaver account each year to make the most of this government bonus.
To give you an idea, at a 3% KiwiSaver contribution rate, your yearly contribution will be:
$900 – on a $30,000 salary
$1,200 – on a $40,000 salary
$1,500 – on a $50,000 salary
A person on a $30,000 salary is missing out on a portion of their free money and to get the full $521 will need to contribute an extra $142.
If you’re earning $34,762 or more on salary - and you’re contributing the minimum 3% to KiwiSaver - then you’re automatically getting the full $521 free from the government each year. (If this is you, the next step is to make sure you’re not in a default KiwiSaver fund).
If you’re earning less than $34,762 per year, you can top up your KiwiSaver account manually, to make sure you contribute a total of $1,042 each year, and ensure you receive the $521 bonus payment from the government.
If you’re a stay-at-home parent, self-employed or on a contributions holiday, you need to make sure you put in $1,042 each year so you still get $521 (this is about $20 per week). If this is a bit of a stretch, don’t worry, you’ll still get 50 cents on any other contributions you put in. eg $500 will get you $271 free money.
If this is all a bit confusing, and you don’t really really understand what’s happening with your KiwiSaver, talking to a financial adviser is the easiest way to get this sorted (remember, their help is free). Making your KiwiSaver work effectively is a simple process. You just need to have a quick chat with someone who knows what they’re talking about.