It's important to review your KiwiSaver to make sure it's working for you. Here are Rachelle's five tips to tidy up your KiwiSaver:
1. Make sure your KiwiSaver provider has your correct tax rate on file. It’s based on your total taxable income for the previous two financial years. KiwiSaver tax is a final tax so you can’t get it back if you overpay. If you underpay, you may get stung with penalties by the IRD. You can check what your tax rate should be here.
If you have online access to your KiwiSaver, you should be able to update this information online, otherwise you should call your provider.
2. While you’re online checking your tax rate, check your KiwiSaver fund type (Defensive, Conservative, Balanced, Growth etc) and that it matches up with your KiwiSaver goal and timeframe. If you’re not planning on withdrawing your funds in the next five years, you really should be in a Growth Fund, or at least a Balanced Fund. The proviso for this is that you don't check your KiwiSaver account too often. It's okay to check your KiwiSaver every couple of months or so, but there's far more fun things to do in life than be obsessed by watching your KiwiSaver every day!
3. Make sure you’re maximising your KiwiSaver benefits. If you’re self-employed, that’s making sure you contribute $21/week to get the maximum Government contribution.
If you’re employed, earning over $34,800 gross per annum and contributing 3% of your gross income for the full KiwiSaver year (which ends on 30 June), then you should qualify for the maximum Government contribution. You can make top-up payments directly to your KiwiSaver provider if your employee contributions aren't quite enough.
As an employee, you should also be receiving employer contributions of 3% of your gross income (less Employer Superannuation Contribution Tax).
NOTE: In the first year of being in KiwiSaver, you may not qualify for the maximum Government contribution. Your contribution entitlement will be pro-rated based on your joining date.
4. Once you’ve maximised your KiwiSaver benefits and are looking to make additional long-term savings, don’t just blithely make them into your KiwiSaver. From 1 April 2019, there are four different contribution rates for employees (3%, 4%, 6% and 10%). However, we encourage our clients to open an investment account where the funds aren’t locked in. It can sit directly alongside your KiwiSaver account, can be invested the same way (or not), is low cost and includes access to an adviser.
5. It costs nothing to sit down with me to talk about your KiwiSaver. Just bring along your latest statement. There's no obligation, pressure or sales tactics. If you meet at a café, I'm buying the coffee! If you live out of Auckland, or would just simply prefer it, I'd be happy to have a virtual meeting using Zoom.
Rachelle Bland, 021 631 327
Rachelle's Primary and Secondary Disclosure Statements are available in her bio on the 'About' page of our website.