KiwiSaver members have six weeks to make sure they qualify to receive the government’s annual contribution of $521.
As long as they’ve contributed at least $1043 in the year to June 30 they’ll receive the full amount from the government. The $521 will appear in their KiwiSaver account in July or August.
Tom Hartmann, Managing Editor of personal financial website sorted.org.nz, says that over a KiwiSaver member’s working life the government contribution could be worth as much as $36,000.
“That’s a real boost to your retirement savings. It’s not often the government wants to give us money to encourage us to save – let’s make sure we qualify for it.”
Last year $785 million, or 47% of the money the government allocated for its contribution to KiwiSaver members went unclaimed – a reflection of the number of members not contributing to their account or not putting in enough each year to receive the full $521.
Here’s a five-step checklist to make sure you don’t miss out:
1. See if you automatically qualify: If you’re an employee earning at least $34,762 a year (before tax) and contribute the minimum 3% into KiwiSaver, you don’t need to do anything. Your contributions will have passed the $1043 mark and the government’s $521 will simply drop into your KiwiSaver account in late July or August.
2. Check if you’ve contributed at least $1043: If you’re a contractor, freelancer, work part-time or earn less than $34,762, you’ll need to check how much you’ve contributed to your KiwiSaver account in the past year. The easiest way to find out is to ask your KiwiSaver provider – here’s a contact list. If you’re not sure who your provider is, call 0800 KIWISAVER.
3. If you’re short, figure out by how much: There’s still time to top-up your account to $1043 to receive the full $521. Your provider can help you figure out how much extra you need to put in to get across the line.
4. Top-up your KiwiSaver account by mid-June: June 30 is the official deadline, but providers prefer members to have the minimum $1043 in their accounts by mid-June so they can process your government contribution efficiently. Make arrangements with your provider to top-up your account, either by automatic payments or a lump sum. Even if you can’t top up to $1043, it’s worth putting in as much as you can as the government will match each dollar with 50c. So even if you finish June with $300, for example, that will still net you an extra $150.
5. Pop in at least $20 a week to get your boost next year: The KiwiSaver year runs from July to June. To make sure you don’t get caught short next year, set up an automatic payment of at least $20 a week, starting this July. When next year rolls around, the full government contribution will drop into your account without you needing to check anything.
For more information see sorted.org.nz
Article written by Commission for Financial Capability