There are several ways in which money can be contributed to your KiwiSaver account. Most importantly, how you contribute depends on your employment status. The various types of contributions are summarised in the following table.
|Contribution type||Employed||Self-employed||Not working||Under 18|
|Employee contributions||Required, unless on a Contribution holiday||No, unless you receive PAYE income*||No||Required, if working|
|Employer contributions||Required, unless on a Contribution holiday||No, unless you receive PAYE income*||No||No|
|Regular payments (E.g. direct debit)||Optional||Optional||Optional||Optional|
|Lump sum payment||Optional||Optional||Optional||Optional|
|Government contributions||You may be eligible to receive up to $521.43. Find out more about the Government contribution.||No|
*If you are self-employed and receive PAYE income you will need to make both employee and employer contributions.
KiwiSaver helps you save for your retirement. If you’re like most KiwiSaver members, the money you contribute will come out of your salary and wages, including bonuses, commission and overtime payments.
Your KiwiSaver contributions are calculated on your gross salary and wages. The minimum contribution is 3% of your wages. You can choose to increase this to 4% or 8%. To do this, simply talk to your employer about changing contribution rates.
A Bill before Parliament proposes adding 6% and 10% options, with effect from 1 April 2019.
You can also make lump sum contributions at any time. It’s easy to deposit money into your Summer account online.
You can find out more about how contributions go from your wages and salary to the IRD, and then into your KiwiSaver account.
Your employer will make a contribution to your KiwiSaver savings, usually 3% of your salary or wages. Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT).
In addition to your KiwiSaver savings and your employer contribution, the Government may also contribute to your KiwiSaver account.
This annual contribution from the Government is one of the easiest ways to boost your KiwiSaver savings – Don’t miss out on your $521.43!
Generally, to be eligible for a Government contribution (also known as member tax credit or MTC) you must be over 18 years of age and not yet eligible to withdraw your KiwiSaver account balance (currently age 65, and after five years of membership in a KiwiSaver scheme or complying superannuation fund), have made personal contributions to KiwiSaver, and be a New Zealand resident.
For every dollar you put in between 1 July and 30 June, the Government pays an extra 50 cents to your KiwiSaver savings, to a maximum of $521.43. That means you would need to contribute at least $1042.86 each year (that’s about $20 per week) to receive the Government contribution.
If you have contributed less than $1042.86, the Government contribution is adjusted on a pro-rata basis. If you’ve only been eligible for part of the year, the maximum credit of $521.43 is reduced proportionately based on the number of days in the year you’ve been a member).
As a general rule, if you earn an annual salary or wages of $35,000 or more and your contribution rate is 3%, you will get the full Government contribution. If you earn less than this, or you are self-employed and are not regularly contributing, you may want to consider topping up your KiwiSaver account to get the full $521.43.
An example contribution breakdown for someone on a salary of $35,000 contributing 3% is shown below:
Each July, we submit claims on our member's behalf and arrange for this to be automatically credited to their accounts. If you are concerned you have not contributed enough to access the maximum Government contribution, please get in touch and we can advise the value of your contributions for the current year.
The Summer KiwiSaver scheme has no minimum transaction requirements, so you can adjust your contributions in line with your cash flow.
If you are either self-employed and PAYE isn't deducted, or are not currently working, you can make regular contributions or lump sums in line with your situation.
You may wish to optimise your contributions to access the Government contribution - see the section above to find out how
Yes – find out about taking a ‘contributions holiday’
Did you start saving for retirement before KiwiSaver was launched? Consolidating into one KiwiSaver scheme may help you to track your savings and the fees that you pay.
As long as the rules of the other superannuation scheme let you transfer to a KiwiSaver scheme, we can assist you with the process and make contact on your behalf with the other provider. Please contact us for more assistance.
Sometimes you can see money leave your salary and wages, but not immediately flow through to your KiwiSaver balance. Don’t worry; it can take three months for contributions to reach your KiwiSaver account.
Your employer deducts money from your salary and wages and sends it to Inland Revenue by the 20th of the following month, through what is called an ‘employer monthly schedule’.
Inland Revenue carefully checks the details on the schedule to ensure accuracy and follows up with your employer if there’s any missing information, or a data mismatch.
Once this process is complete, Inland Revenue then passes your contributions, along with interest earned on the money during this time, to your KiwiSaver provider.
To help you keep track of contributions through this process go to Inland Revenue’s website and log into My KiwiSaver.