Nearly a quarter of Kiwis enroled in KiwiSaver are missing out on the ‘free’ $521 from the government, data from Inland Revenue shows.
KiwiSaver members have until 30 June to make sure they’ve put NZ$1,042.86 into their KiwiSaver accounts for the year, to claim the full $521.
Experts say it’s wise to contribute it before mid-June, to make sure the payments are processed in time.
Even if you can’t contribute the full NZ$1,042.86, for every dollar you invest in KiwiSaver up to that amount, the government matches it with 50 cents. So you’ll still be getting some contribution from the government, provided you’re contributing yourself.
Data from Inland Revenue shows that in the year to June 2017, 24 per cent of KiwiSaver members eligible for the government money, also referred to as a ‘tax credit’, didn’t receive it.
But just over three quarters – 76 per cent – eligible for the tax credit, did receive it.
And 52 per cent who were eligible for the maximum tax credit received the maximum amount.
Simone Robbers, Acting Head of External Communications and Investor Capability at the Financial Markets Authority, says: “The government tax credits really add up over your working life because $521 a year will add up to close to NZ$36,000 by the time you’re 65.
“We think it’s really important for providers to remind their members about putting in enough money to get the maximum member tax credit. Provided you have the money to do so, it makes a lot of sense,” Robbers says.
“After being involved in KiwiSaver, actually contributing is the next most important thing you can do,” Gregory says.
“We understand that not everyone can afford to make large, regular contributions. But if you can, you should try to contribute at least enough to get the $521 government contribution.
“It’s free money and every dollar you put in is a dollar that compounds over time,” Gregory says.
Your KiwiSaver provider will organise the payment of the government money into your account around July or August, Robbers says.
How do you qualify for the tax credit?
You’ll receive it if you’re contributing NZ$1,042.86 each year into your KiwiSaver account, or another complying fund, if you’re aged between 18 and 65, and you’re living mostly in New Zealand.
Find out more at kiwisaver.govt.nz or ask your KiwiSaver provider.
First published 17 May, 2018
Story by Claire Connell
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