Retirement savings may not be in your thoughts at this time but did you know that you may be missing out on free Government money?
Every year the Government offers KiwiSaver members the opportunity to receive a credit of up to $521.43. That annual bonus contribution can really add up over the years and make a meaningful difference to the balance of your nest egg.
There are some conditions – you have to be resident in New Zealand, aged between 18 and 65 and you also have to make personal contributions – to be eligible for these bonus contributions.
There are many reasons why a member might stop making contributions however we don’t think this should be a set and forget decision. By not contributing you are missing out on:
- bonus Government contributions
- employer’s contributions (if you are employed); and
- the opportunity for investment earnings on these amounts.
If you are not currently contributing then take time to consider whether you want to resume regular contributions.
A little bit saved up over a long period can add up to a lot, and the bonus Government contributions may make a real difference to your overall savings.
Not in paid employment
There’s a common misconception going around that you have to be in paid employment to qualify for the Government contributions. You don’t, you just have to make personal contributions.
In paid employment
If you are in paid employment and have stopped contributing (e.g. on a ‘contribution holiday’) then you can restart your contributions by asking your employer to begin making deductions again. Your employer will then be required to begin compulsory employer contributions again.
If you are working and earning more than $34,800 a year then the regular 3% deduction from your pay means you will qualify for the maximum bonus Government contribution.
Contributing less than $1,042 a year
If you are contributing but your personal contributions are less than $1,042 a year then consider making some additional regular or lump sum contributions so that you can qualify for the maximum free Government contribution.
Earning less than $34,800? Then consider making some additional regular or lump sum contributions so that you can qualify for the maximum free Government contribution.
The Government contribution amount is worked out on the personal contributions you make between 1 July and 30 June each year.