KiwiSaver Is a No-Brainer, Even if You’re Self-Employed

KiwiSaver Is a No-Brainer, Even if You’re Self-Employed


The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.


By Donna Nicolof, Head of Wealth & Private Bank team, BNZ

If you have your own business, or are thinking of starting one, KiwiSaver is a no-brainer. More than 2.5 million Kiwis have joined the government’s retirement savings initiative since it launched in 2007, including many people who own their own business or work for themselves.

It’s true that if you are self-employed, you won’t receive any employer contributions. But the good news is you’ll get all the other benefits that come with KiwiSaver. Importantly (assuming your business doesn’t pay you an income from which it deducts PAYE), you’ll get flexibility around the level of your contributions. When you have the day-to-day running of a business to take care of and less certainty over your income, this flexibility is something you’ll really appreciate.

Choose how much you want to contribute

Employees have to regularly contribute at a rate of three, four or eight per cent of their gross income and can make additional contributions as and when they wish. However, being self-employed allows you to choose when and how much you contribute. This gives you the flexibility to manage your contributions to suit your cash flow. 

When times are tough, you may choose not to contribute at all. But when business is good you can start contributing again – or increase your contributions to a level where you can make up for the times you weren’t able to put money aside. Of course, you can also make regular contributions by direct debit or automatic payment to your chosen scheme provider, subject to any minimum contribution amounts they might have. 

Most KiwiSaver providers give you online access to your KiwiSaver account, so it’s really easy to stay on top of your savings, especially if you’re only putting a bit of money aside every now and again. If your KiwiSaver account is with the same organisation that manages your personal or business banking, it should be easy to transfer money across and view your KiwiSaver account balance alongside your other accounts. 

Why it’s worth your while

As well as the flexibility in making contributions, you could enjoy the other incentives that come with KiwiSaver. These include the KiwiSaver Member Tax Credit (MTC), where for every dollar you put into your KiwiSaver account, the government will add a further 50 cents, up to a maximum of $521.43 each year. So providing you are eligible for the MTC, by contributing $1,042.86 each year, you could receive a 50 per cent return on that part of your contribution! To get you across the line, that’s the equivalent of a $20 contribution each week, or you could make a one-off, lump-sum annual payment.

Self-employed members may also be able to take advantage of the government incentives for first-home buyers: the KiwiSaver first-home withdrawal and the KiwiSaver HomeStart grant.

Use your KiwiSaver account to diversify your investments

It’s likely your primary focus is to invest in your business. Maybe your aim is that one day you’ll sell your business for a handsome sum and that will provide for you and your family in retirement.

But can you be sure that your business will be worth what you’d like it to be when that day arrives? Your business is subject to the many different forces that drive our economy, so there’s a real risk to your future financial well-being if all your wealth is tied up in your business. One way of reducing that risk is to hold some of your wealth outside your business.

A KiwiSaver account could help you diversify your investments. Depending on the KiwiSaver scheme and fund you choose, it’s likely your KiwiSaver savings will end up being invested in cash, property, fixed interest and shares – both in New Zealand and overseas. This diversified portfolio will spread your savings across different types of investments, companies and geographic regions, leaving your wealth less exposed to New Zealand’s economic and business cycles.

Act now for a more prosperous retirement

If you’re thinking of joining KiwiSaver, now is as good a time as any. Waiting until your business is established before starting to think about retirement savings may not be the best idea, as you might not have time on your side. When it comes to investing and building meaningful savings, time is a valuable asset, because the power of compounding returns can be phenomenal. So act now if you want to join KiwiSaver. Your dollars – especially when combined with any government contributions – could really start to stack up.

This article is solely for information purposes and is not personalised financial advice. None of BNZ Investment Services Limited, Bank of New Zealand or any other person accept any liability for any loss or damage arising out of the use of, or reliance on, any information in this article.



    If your business pays you an income from which it deducts PAYE, you’ll be treated as both an employee and an employer, for the purposes of KiwiSaver contributions. You’ll need to contribute a minimum of three per cent of your salary into your KiwiSaver account, but your business will also need to make employer contributions of three per cent.

    Once you join KiwiSaver you can’t opt out. So if you return to employment, your employer will begin to deduct contributions from your salary or wages, unless you go on a contributions holiday.

•    If you’re mainly employed, but you run a business on the side, you’ll need to pay a minimum of three per cent of the salary or wages you receive from both your main employment and your business into your KiwiSaver account.

    If you intend to access the government’s HomeStart grant, you’ll need to meet the same conditions as someone who’s employed. So you’ll need to show that you’ve contributed at least three per cent of your annual salary or wages into your KiwiSaver account, for a minimum of three years.

    If you’re thinking of joining KiwiSaver, don’t delay! Your maximum MTC entitlement when you first become a member of a KiwiSaver scheme is pro-rated, based on what date in the MTC year (1 July to 30 June) you join. By joining sooner – even if you don’t actually contribute until later in the MTC year – your potential MTC boost in your first year will be bigger. 

The ins and outs of the Member Tax Credit (MTC)

The government will contribute 50 cents for every dollar you contribute to your KiwiSaver account — up to a maximum government contribution of $521.43 each year. To get the maximum credit, you need to contribute at least $1,042.86 in any year (which for the purposes of the credit is 1 July to 30 June), and be eligible for the full year.

Eligibility criteria

To qualify for the MTC you need to be aged over 18 and mainly living in New Zealand. You can be eligible for the credit every year, until you reach the age at which you’re able to withdraw your KiwiSaver savings.

Eligible for only part of the year?

If you joined KiwiSaver part way through the year, or were eligible for only part of the year, your maximum MTC entitlement will be pro-rated depending on how long you qualified to receive it.


COMPOUNDING RETURNS: the returns from an investment, when both the initial capital and subsequent investment gains continue to be reinvested over a period of time.  

CONTRIBUTIONS HOLIDAY: a break from making KiwiSaver contributions.