Don’t leave money on the table: the government's contribution on your KiwiSaver investment

May 3, 2023

If someone told you that you could get $521 right now, you would probably jump at the chance. Who doesn’t want a bit of extra cash?

But every year, thousands of New Zealanders miss out on the opportunity to add a little bit to their KiwiSaver, with an extra top-up from the government.

What top-up are we talking about?

As part of KiwiSaver, the government offers a member tax credit to every qualifying member, every year. There is $521.43 available annually, if you meet the contribution criteria, and many people are missing out.

How does it work?

To get the full amount, people need to have made their own contributions of at least $1042.86 into their KiwiSaver accounts in the 12 months leading up to June 30 of each year. They must also be over 18 and live mainly in New Zealand or be working as a government employee or volunteer for a set range of charities overseas.

Contributions of less than that amount are matched at a rate of 50c per $1 saved. People who joined KiwiSaver on or after July 1, 2019, can get the contribution until they turn 65. Those who were members earlier than 2019 can get it until they turn 65, or for five years, whichever is later.

Who isn’t getting it?

A lot of people still aren’t getting this money, which means they end up with less in their KiwiSaver accounts than they otherwise would have. One study by Inland Revenue found half of the people surveyed had not heard of the credit. That’s not a problem if they’re working full time and contributing automatically because they will probably contribute enough to get it anyway. But if they aren’t, it’s a problem. If you are self-employed, not working at the moment or only working part-time, you may need to check whether you’re on track. Some years, as many as a million people haven’t received the full credit. Data from Inland Revenue in 2021 showed that a quarter of those enrolled didn’t get the maximum amount they could have.

What do you need to do?

If you aren’t already making contributions of at least $20 a week into your KiwiSaver account, now is the time to start. You can set it up as a regular payment to ensure you always get the full $521 - or make a note in your diary to put a lump sum in every year as the June 30 date looms. Even if your main investment strategy is something other than KiwiSaver, it usually makes sense to make the most of this bonus, too.

Many self-employed people who do not have the benefit of employer contributions still contribute enough to ensure they get the tax credit.

Like to talk?

If you’d like to chat about this or any other aspect of your retirement savings and investment strategy, get in touch with us. There are lots of ways to get to your savings goal and KiwiSaver is just one part of the puzzle. Give us a call.

The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.