Last year over a million New Zealanders with KiwiSaver missed out on money that could have added up to a much better retirement for each of them.
Don’t want to miss out? Here are five simple steps you can take to make sure you get your member tax credit this year and beyond.
1. Understand the benefits
Sometimes a little can go a surpisingly long way.
While the maximum annual member tax credit of $521 may not necessarily sound like a lot, the Commission for Financial Capability says the long-term benefits of time and compounding can provide a major boost to savings – in fact, over the years, it can add up to as much as $36,000.
The member tax credit was designed to encourage retirement savings with the Government contributing 50 cents for every $1 KiwiSaver members save, up to $1,043 each year.
According to Glenys Wilson, financial adviser at investment specialist and KiwiSaver provider Mercer, you’d be hard pressed to find another investment offering a 50% return at such low risk.
2. Check your eligibility
To be eligible for the member tax credit, you’ll need to be aged 18 or over, living mainly in New Zealand and making contributions to your KiwiSaver account.
Once you’ve reached 65 and able to withdraw your KiwiSaver savings (provided you’ve been a member for five years), you’ll no longer be eligible for the Government’s annual contribution.
3. Check your contributions
Provided you’re eligible, you’ll need to contribute $1,043 between 1 July and 30 June to get the maximum member tax credit of $521.
Many KiwiSaver scheme providers let their members know how they’re tracking towards the $1,043 target well before 30 June. However, it’s also easy to go online and check your contributions at your KiwiSaver scheme provider’s website, as well as the Inland Revenue website.
If you’re working part time, earning under $35,000, on a contributions holiday, a non-paid worker, self-employed, a contractor, beneficiary or student, it will be more likely you’ll need to top up your contributions to get the full member tax credit.
4. Make a voluntary contribution
Need to top up your KiwiSaver contributions? The fastest and easiest way to top up is directly to Mercer via your online banking. Simply search for Mercer KiwiSaver scheme in the organisation or person you wish to pay.
5. Set yourself up for the future
Mercer’s Glenys Wilson says while it can be difficult for those on a low or irregular income to save, making four lump-sum payments of $261 across the year makes getting the full member tax credit achievable.
She also recommends scheduling an annual KiwiSaver health check that includes checking your member tax credit entitlements and retirement savings progress and making sure you’re in an investment fund that still matches your preferences and timeframes.
6. Check-in with your family
If you have relatives that are studying, working part-time or on maternity leave, they may not be maximizing their KiwiSaver member tax credits. To make sure they don’t miss out on their full entitlement, get them to check their contributions by contacting their KiwiSaver provider, or visiting the Inland Revenue website.
Remember, you have until 30 June 2017 to claim your 2016 member tax credit.
Need help making sure your getting the most out of your KiwiSaver? Talk to Mercer by calling the Helpline team on 0508 637 237, 9am to 7pm on all business days.