One of the appealing aspects of KiwiSaver is the annual Government Contribution, a benefit designed to boost your savings. But how do you ensure you get the most out of this opportunity? This article delves into some of the information and strategies to maximise your KiwiSaver account through Government Contributions.

Understanding Eligibility

You’re generally eligible for the annual Government Contribution if you:

• Are aged 18 to 64
• Contribute to your KiwiSaver account, and
• Mainly live in New Zealand

How contributions work

The New Zealand Government contributes 50 cents for every dollar you add to your KiwiSaver account, capped at $521.43 per year. To unlock the full potential of this contribution, you need to contribute at least $1,042.86 annually between 1 July and 30 June.

Ever wondered what the lifetime value of annual KiwiSaver Government Contributions is?

If you receive the full $521.43 each year from the age of 18 to 64, your KiwiSaver retirement balance could be over $76,000 bigger*. Along with your contributions to your Pie KiwiSaver Scheme account of $1,042.86 each year, it could be an extra $233,000*.

*Based on sorted.org.nz’s Savings Calculator, putting aside $521.43 each year over 46 years, at an annualised return after fees of 4.5% pa (assuming PIR of 28%).

The Timing

The Government’s Contribution is calculated post-30 June each year and usually reaches your account by the end of August. If you're planning on making a voluntary contribution to get the maximum amount, it's prudent to do so well before the cut-off date to allow for processing times.

Strategies for Maximisation

Here are strategies to ensure you don’t miss out:

• For employees: Regular contributions through your salary should cover you, if you're contributing 3% of an annual salary of $35,000 or more.
• For the self-employed or those not receiving a regular income (or on a savings suspension): Consider setting up regular voluntary contributions to meet the annual threshold. A little over $20 a week will get you the maximum Government Contribution.
• Top-ups: If your annual contributions fall short, you can make a lump-sum top-up contribution before 30 June each year.

Special Considerations

• Contributions from your employer, as well as amounts transferred from Australian retirement schemes, don’t count towards your personal contributions for the Government Contribution.

Final Notes

Remember, KiwiSaver is a long-term savings initiative, and the Government Contribution is just one aspect of growing your retirement pot. Consistent contributions over time, along with careful fund choice, will set you on the path to a more comfortable retirement.

If you wish to learn more about our Pie KiwiSaver Scheme offering, our client services team is ready to help. With the right approach, you can optimise your KiwiSaver account for maximum benefit both now and in your golden years. 

Information is current as at 24 April 2024. Pie Funds Management Limited is the manager and issuer of the funds in the Pie Funds Management Scheme and Pie KiwiSaver Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a reliable indicator of future returns. Returns can be negative as well as positive and returns over different periods may vary.