Do you have KiwiSaver, or are you planning to join the scheme? Then there’s one key benefit that you should know about – the annual KiwiSaver Government contribution.
This annual contribution is meant to boost your KiwiSaver savings – in a way, you can think of it as a ‘reward’ for being a good saver. So, how does it work and how can you maximise the Government contribution? Read on to learn more.
How does it work?
Each year, the Government contributes 50 cents for every dollar that you contribute to your KiwiSaver account, up to a maximum of $521.43 per year – so even if you don’t contribute the maximum, you will still get a Government contribution.
The amount is calculated based on your savings and eligibility between July 1 and June 30 every year, and is paid directly to your KiwiSaver account. To be eligible, you need to:
- be aged between 18 and 64 years old
- be a contributing member to KiwiSaver, no matter if employed, self-employed or unemployed
- mainly live in New Zealand.
How can you get maximum contribution amount ($521.43)?
To get the maximum Government contribution amount of $521.43, you need to contribute at least $1,042.86 in the year from 1 July to 30 June by yourself, which means excluding your employer’s contributions (if you’re employed, of course). This comes to just over $20 a week on average.
In other words, if you are earning at least $35,000 a year and contribute at least 3 per cent of your income to KiwiSaver, you should qualify for the full $521.43 automatically.
As we said, even if you contribute less than $1,042.86 in the year, you will still receive a ‘boost’ of 50 cent for every dollar you save. But if you’re aiming for the maximum Government contribution amount and your regular contributions aren’t enough to meet the target, there are steps you can take, including:
- Checking your balance and making up the difference by paying a lump sum.
- Increasing your contribution rate.
- Making voluntary contributions on a regular basis.
Making the most of your KiwiSaver
The annual Government contribution is one of the key benefits of your KiwiSaver membership. No other investment vehicle gives you a 50 per cent return on a portion of your savings. All you need to do is save throughout the year, and contribute at least $1,042.86 by the cut-off date of 30 June.
Remember, when it comes to saving for retirement or your first-home deposit (or both), every dollar counts.
Need some advice?
Get in touch – as your advisers, we are always ready to help with your future goals. We are always here to answer your questions, so please feel free to reach out to us.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.