Making voluntary contributions to your KiwiSaver account can prove beneficial for your long-term savings. But how do you go about doing so? Here, Canstar provides a brief guide on how to make voluntary KiwiSaver contributions.
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 (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.
On the other hand, if you’re not working for an employer, you can still contribute to your KiwiSaver account by making voluntary contributions, of an agreed upon rate, directly to your KiwiSaver provider.
What are Voluntary KiwiSaver Contributions?
If you’re enrolled in a KiwiSaver scheme and are self-employed, a contractor, not working or are receiving a benefit, you’ll need to ensure that you make voluntary contributions to meet the minimum 3% requirements.
Making voluntary contributions in this case, helps ensure that you are saving for your retirement or first home purchase, even when you aren’t working for an employer.
In many cases, you can also make voluntary contributions or lump sum payments even if you are employed. For example, you can make a lump sum payment to top up your KiwiSaver account to help you reach the minimum required amount to be eligible for a government contribution.
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.
At present, there is no limit on how much you can elect to contribute but you should be aware that it takes about 3 months for a KiwiSaver payment to reach your KiwiSaver account.
If you’re making a voluntary contribution through Inland Revenue, there are two forms of payment that you are able to choose from.
In order to make a voluntary contribution to your KiwiSaver account through Inland Revenue by way of internet banking, you’ll first need to choose the ‘Pay tax’ option on your internet banking service. Then, you’ll need to include your IRD number, the tax type “KSS”, and period “0” (zero).
If you opt to pay by cheque, you’ll need to send payments, which must include your IRD number and a clear indication that it’s for KiwiSaver, to Inland Revenue’s PO Box address.
Keep track of your KiwiSaver contributions
It’s wise to keep track of your KiwiSaver contributions, which can be done at any time by registering for a ‘My KiwiSaver’ account on the Inland Revenue website. That way, you can see how you are tracking with your savings and see whether you want to adjust your contribution rate to help you meet your goal.
My KiwiSaver will not only keep track of all your contributions, whether made by you, your employer or the government, but will also allow you to:
- see any interest Inland Revenue credits to your account
- see when Inland Revenue transfers the money to your scheme provider (this is the effective date of any interest for the month contributions are made)
- view and update your contact details
- find out how to contact your KiwiSaver provider, and see a list of all current KiwiSaver providers
- request an information pack
- apply for a savings suspension holiday
- opt out of KiwiSaver (if you were automatically enrolled, and the deadline hasn’t passed)
- track your requests (for example requests for an information pack or applications for a savings suspension), and see how they’re progressing.
What My KiwiSaver does not show, however, is any payments made directly to your KiwiSaver provider, the return on your investment, 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 KiwiSaver contribution rate is simple. If you’re an employee, you can change your contribution rate once, every 3 months, unless your employer agrees to a shorter timeframe. In order to change your contribution rate, you will need to let your employer know in writing.
If you are not an employee, the contribution you pay will be set out in the agreement that you have with your KiwiSaver provider. In most cases, your agreement will contain a minimum annual sum that you will need to contribute, as well as, specific payment periods that apply, such as monthly or quarterly.
Getting the most out of KiwiSaver
To ensure you’re getting the most out of your KiwiSaver contributions and in order to maximise the return on your investment, it’s imperative that you regularly review your contributions and ensure that you’re investing in the right KiwiSaver funds that meet your needs.
Ensuring that you’re investing in the right KiwiSaver fund is an important way to get the most out of KiwiSaver, it is just as wise to choose the right KiwiSaver scheme provider. Compare KiwiSaver scheme providers by taking a look at Canstar’s 2019 KiwiSaver ratings.