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Fisher Funds Answers: When does the Government contribute to KiwiSaver?

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20 May, 2020

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If you’re in KiwiSaver and you want to know whether you qualify for the Annual Government Contribution, and what you need to do to receive it, one of our KiwiSaver Specialits, Kalasia Senico explains all you need to know in the video below. We understand that this year many Kiwis have more competing financial priorities than ever before, but if you qualify and you can afford it, this is one of the best ways to make the most of your KiwiSaver.

To be eligible for the Government contribution you must be aged between 18 and 65, and be resident in New Zealand for most of the KiwiSaver year (1 July to 30 June).  If you’re only eligible for part of the year, your Government contribution will be pro-rated based on the number of days you were eligible in the year. More information can be found below.

 

You’re probably familiar with the general “formula” that makes up KiwiSaver:

Your contribution + your employer’s contribution + the Government’s contribution +/- investment returns and tax = Your KiwiSaver investment.

If you’re employed, you’ll see on your payslips that you and your employer contribute with each pay cycle throughout the year. If you’re self-employed or not employed, you may have automatic payments set up, or perhaps you contribute on an ad-hoc basis.

But when does the Government contribute to KiwiSaver?

The Government contributes to KiwiSaver once per year after the end of the KiwiSaver year, which runs from 1 July to 30 June. How much the Government will contribute to your KiwiSaver account depends on how much you have contributed yourself within this time. It takes some time for the Government contribution to process through the IRD, but you should see it appear in your KiwiSaver account by the end of August.

How does the annual Government contribution to KiwiSaver work?

For every $1 that you contribute yourself, the Government will contribute 50 cents, up to a maximum of $521.43 each year.

This means if you contribute $250, the Government will contribute $125. If you contribute $1,000, the Government will contribute $500.

How do I get my full Government contribution?

You need to contribute $1,042.86 each KiwiSaver year to ensure you receive the maximum Government contribution of $521.43.

Depending on how much you earn and what your contribution rate is, you may already be eligible for the full amount based on your regular contributions.

If you have not contributed at least $1,042.86 this KiwiSaver year, it might be worth “topping up” in order to get the maximum Government contribution. This can easily be done by making a direct debit though Fisher Funds Online or with the payment details found here. Feel free to get in touch if you are unsure of the amount you have contributed on 0508 347 437.

Keep in mind it can take several business days to credit any deposit you make to your KiwiSaver account. For this year, your payment must, therefore, reach us by 24 June to ensure we have time to process your deposit before the 30 June deadline.

If you are unable to contribute the full $1,042.86, the Government will still add $10 for every $20 you contribute (up to a maximum of $521.43), so every dollar you contribute will make a difference.

Who is eligible for the annual Government contribution?

All New Zealand residents 18 years or older who mainly live in NZ and are not yet entitled to withdraw for retirement (reached the age of 65) are eligible to receive the Government contribution.

If you joined KiwiSaver part-way through a KiwiSaver year, you'll receive a Government contribution for the portion of the year that you've been a member.

Similarly, if you turn 18 during the KiwiSaver year you'll receive a Government contribution for the portion of the year that you were 18.

If you reach your KiwiSaver retirement age (65) part-way through a KiwiSaver year, you'll receive a Government contribution for the portion of the year before you reached your KiwiSaver retirement age.

For more answers to questions like this as well as insights from our investment team, visit our video library.

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