KiwiSaver
1. Employees - This applies to full time or part time employees. KiwiSaver is a no-brainer. Each employee is required to contribute either 4% or 8% of their gross salary. In return the employee receives a $1,000 kick-start from the Government, a mandatory contribution from the employer commencing 1st April 2008 of 1%, increasing each year by a further 1% until 1st April 2011 when the employer will be contributing 4% to the employees KiwiSaver and a government contribution of $1,040 p.a. Any contribution by the employer is non taxable.
2. Unemployed - This applies to non-working partners, students or other. I suggest that you contribute $1,040 p.a. where it is matched by the government. You also get the $1,000 kick-start.
3. Self Employed - This is potentially a mixture of 1 & 2 above. At the minimum invest $1,040 p.a. and it will be matched by the government.
Most self employed are both an employer and employee. If this is the case then make your contribution as an employee (i.e. pay PAYE). It must be matched by your employer. On the face of it, it is a case of the left hand paying the right hand. BUT the employer's contribution is tax free AND the employer
gets $40 p.a. for each employee that is a member of KiwiSaver.
The table below shows the impact of investing via KiwiSaver.
| Year |
Government
Contribution
|
Your Contribution |
Savings at year end before % return on KiwiSaver investment |
| 1 |
1,000 + 1,040 |
1,040 |
3,080 |
| 2 |
1,040 |
1,040 |
5,160 |
| 3 |
1,040 |
1,040 |
7,240 |
| 4 |
1,040 |
1,040 |
9,320 |
| 5 |
1,040 |
1,040 |
11,400 |
| Total |
6,200 |
5,200 |
11,400 |
I have a view that any contribution from a third party is great and therefore for most of us KiwiSaver is great.
Please call me with any queries.
|