Making KiwiSaver contributions
Typically, if you are employed and enrolled in KiwiSaver, you have to contribute a minimum of 3% of your salary. However, you can choose to contribute more. This could be either 4%, 6%, 8%, or 10%. This contribution will be automatically deducted from each pay and your employer will also contribute at least 3% of your gross salary.
But, it doesn’t have to stop there. Even if you’re contributing the maximum 10% contribution rate, you are welcome to add more of your own cash at any time. After all, KiwiSaver is about building a nest egg for retirement, or to buy a first home. Putting a cap on how much you can put into your KiwiSaver account would be somewhat counterintuitive. That means if you receive a hefty bonus, or just have a heap of cash sitting in your savings account, you can chuck it into KiwiSaver instead.
Additionally, if you’re self-employed (or perhaps in between jobs) and therefore have no employer to contribute for you, you can still make voluntary KiwiSaver contributions at any time. While you don’t have the benefit of an employer paying 3% into your fund, KiwiSaver still offers other great benefits. Government contributions and first home withdrawals are both an example of this. But, for these, there are a few catches, which we’ll get to later.
What are voluntary KiwiSaver contributions?
Voluntary KiwiSaver contributions are any form of contribution beyond what is required. For employees, that means anything extra you wish to add beyond your regular salary contributions. You may be contributing 3% of each pay, but feel the need to add an extra $1000 lump sum payment one month.
For the self-employed, voluntary KiwiSaver contributions mean any money you put in at all, as you have no regular PAYE deductions.
Why make voluntary KiwiSaver contributions?
Whether or not making voluntary KiwiSaver contributions is right for you depends on a variety of factors. And largely, its importance depends on whether you are an employee, or self-employed (including contractors and freelancers).
If you’re an employee, you are already making regular KiwiSaver contributions, as is your employer. Any voluntary KiwiSaver contributions you make are simply in addition to this. You may choose to do this if you have extra funds available that could be put to better use. For example, your average savings account is currently earning less than 1% interest per annum. That’s not even enough to keep up with inflation. Even a conservative KiwiSaver fund would be expected to significantly outperform this. By adding extra funds into your KiwiSaver account, you are allowing your savings to grow and work for you.
Keep in mind, that your KiwiSaver balance isn’t easily accessible. So it’s important not to over-commit, as you won’t be able to withdraw any voluntary KiwiSaver contributions you make.
If you’re enrolled in a KiwiSaver scheme and are self-employed, a contractor, not working or are receiving a benefit, then you will not have regular KiwiSaver contributions being made on your behalf. It is up to you to make voluntary KiwiSaver contributions. While there is no minimum or maximum amount you can contribute, there are some certain financial thresholds you should look to meet.
Every year, the government contributes up to a maximum of $521.43 to your KiwiSaver fund. But, in order to get this, you need to contribute at least double that (a minimum of $1042.86). Anything less, and you won’t get the full contribution. You will, however, still get half of what you contributed. So if you put in $600, the government will put in $300, etc.
You need to make this contribution before June 30th each year. You can do it as a lump sum contribution, or as regular automatic payments.
KiwiSaver withdrawal and the First Home Grant
KiwiSaver can help in the purchase of your first home. Most providers allow KiwiSaver members to withdraw their KiwiSaver balance to use as a deposit for a first home. Under a KiwiSaver withdrawal, KiwiSaver members can withdrawal as much or as little of their balance as they choose (so long as a minimum of $1000 is left). For many first home buyers, their KiwiSaver balance plays a crucial role in securing that first home.
Additionally, KiwiSaver members also have access to the government’s First Home Grant. While this grant doesn’t come from your KiwiSaver balance, you have to be a member to be eligible. This provides a grant of up to $10,000 to be put towards your first home deposit.
In order to be eligible for these schemes, you have to be a member of KiwiSaver and have contributed at least 3% of your income, for a minimum of three years. The key point here is the 3% contribution. Simply being a KiwiSaver member isn’t enough.
While employees (those on PAYE) will be contributing this 3% minimum by default, if you’re self-employed it’s up to you to calculate your voluntary KiwiSaver contributions to ensure they equal at least 3% of your income each year. Anything less and these benefits won’t be available to you.
→Related article: Is Putting Extra Money Into KiwiSaver Worth It?
How to make voluntary KiwiSaver contributions
You can make voluntary contributions or lump sum payments at any time, either directly to your KiwiSaver provider or through Inland Revenue.
If your KiwiSaver provider is the same as your everyday banking provider (or you have other transaction accounts with your KiwiSaver provider) then making contributions is easy. You can simply open your bank app and transfer funds across. Much like transferring funds between any other accounts.
Otherwise, you can make voluntary KiwiSaver contributions either directly to your KiwiSaver provider (just visit your KiwiSaver provider’s website) or through IRD.
Do be aware that transferring funds is not instant. When you transfer directly to your KiwiSaver provider, it can take five or more working days to complete the transaction. If going through IRD, it can take up to three months to finally make it into your KiwiSaver fund.
Paying through Inland Revenue
In order to make a voluntary contribution to your KiwiSaver account through Inland Revenue, you first need to choose the Pay Tax option on your internet banking service. Then, you must enter the details in the format outlined by IRD.
If you prefer to make voluntary contributions via phone, in person, or from overseas, you can get more details on how to do so here.
Keep track of your KiwiSaver contributions
Keeping track of your KiwiSaver contributions is crucial. It helps you see if you’re on track with your savings goals, and whether you should review your contribution rate. It also helps track how your fund is performing, and whether you should be looking at changing KiwiSaver providers.
There are two ways to best keep track of your KiwiSaver contributions and performance.
One easy way to keep track of your KiwiSaver balance is to use the Inland Revenue Department’s (IRD) myIR platform. myIR keeps tabs on your income tax, any student loans and KiwiSaver. Through myIR you can see any government contributions to KiwiSaver and contributions that are paid to IRD. This includes how much is coming out of your salary, and how much your employer is contributing.
There are a few things to keep in mind when checking your KiwiSaver balance through myIR:
- myIR does not display your overall balance, as it does not include investment gains and losses
- It will only show contributions after they have been processed from your employer’s payroll report. This can take a few months, depending on your employer, from when they are deducted from your salary or wages
- You will be able to see when Inland Revenue transfers the money to your KiwiSaver scheme provider
Through your KiwiSaver provider
What myIR does not show, however, is any payments made directly to your KiwiSaver provider, the return on your investments, and your overall KiwiSaver account balance. For this information, you’ll need to contact your KiwiSaver provider directly.
How do you change your KiwiSaver contribution rate?
Changing your contributor rate is super easy.
Let your employer know you want to change it, and they can do it for you. All you’ll need to do is fill out the KiwiSaver deduction form, which takes just a few minutes.
Do note that you can change your contribution rate once, every three months, unless your employer agrees to a shorter time frame.
If you are not an employee, you may not have a set contributor rate. So you can change how much you are contributing at any time. However, in some cases, you may have an agreement with your KiwiSaver provider around payments. This could include a minimum annual sum that you need to contribute, as well as specific payment periods that apply, such as monthly or quarterly.
So, in order to change your contribution rate, in cases where you are not an employee, you may need to discuss this directly with your KiwiSaver provider.
Getting the most out of KiwiSaver
If you are looking to grow your KiwiSaver fund, adding more of your own money isn’t the only way. You should be looking at your fund type and your fund’s performance. Are you in the right fund type for your needs? Are your returns as high as other funds? Or, are you overpaying when it comes to fees?
At Canstar, we make it easy to see how your KiwiSaver fund stacks up. With our helpful comparison tool, you can see the past one-year, three-year, five-year, and even seven-year returns of all the available funds, alongside other information such as annual fees, termination fees, added features, and the Canstar star rating. To learn more or to start comparing click the button below:
About the author of this page
This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.
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