Better Decisions | Better Outcomes | Better Lifestyle

Missing out on free money? Your employer could be to blame...

Mon June 11th 2018

For less than the price of a couple of beers, or four lattes per week you could boost your KiwiSaver account with over $520 of free money. However, more than half a million KiwiSaver members left $270 million of government contributions unclaimed last year, and employers may be partly to blame.

Last year, more than half a million KiwiSaver members missed out on $270 million in government contributions, and their employers may be partly to blame.

A Commission for Financial Capability (CFFC) survey in May of 500 companies showed only 55 per cent of employers paid the 3 per cent on top of wages, 10 per cent paid it out of their employees' salaries, 20 per cent were 'not sure', 10 per cent said 'it varied' and 5 per cent offered other pension schemes.

David Boyle, education manager at the Commission for Financial Capability, said employers need to be more aware of fulfilling their legal obligation to pay the required 3 per cent employer contribution to KiwiSaver on top of their employees' wages.

"I think employers need to be more aware of their obligations to their staff. Legislation requires them to pay their 3 per cent on top of wages, and if they want to negotiate to include it in an employee's package, then in good faith they should increase that person's salary by 3 per cent," Boyle said.

"If an employee thinks their employer is not meeting their legal obligations, they can complain anonymously to IRD."

Other KiwiSaver members are missing out on the $521 Member Tax Credit contribution from the government by not contributing the minimum amount each year.

If a KiwiSaver member does not contribute at least $1042 to their account by June 30 each year, they are not eligible for the full government contribution of $521.

By the end of June 2017, more than 520,000 KiwiSaver members had not contributed anything to their accounts, missing out on $270 million in Member Tax Credit contributions.

Boyle says the $521 is "practically free money" to encourage KiwiSaver members to contribute at least $20 a week.

"That's less than the price of a couple of beers, or four lattes per week," Boyle said.

Boyle believes responsible employers should revisit KiwiSaver with their staff each July to make sure they are contributing at least $20 a week so they are eligible for the Member Tax Credit on June 30 the following year.

"It's money the Government is happy to give us to encourage us to save – let's not leave it sitting on the table," Boyle said.

Source: NZ Herald, 7th June 2018

Need our help?

We're here to answer your questions.


09 302 7310

1D Roberta Avenue
Glendowie
Auckland 1071
New Zealand

  • Cave Financial have given us excellent advice on both our KiwiSaver and Investment Property Portfolio. I highly recommend Michael and Team. They're helpful, friendly, explain things making it easy to understand and walk you through every step of the process. Highly recommended!

    Matt

  • Cave Financial and team have been the absolute back bone of not only my business but my family’s future. I have so much respect and trust for your team, Michael. I’m so grateful to have your full support and feel secure with your values and guidance. I would highly recommend Cave Financial to anybody wanting peace of mind. 10/5 service!

    Miles

  • Helped so much with answering all of our questions around life insurance, then got us the best deal. Couldn’t be happier. 10/10.

    Lana and Hannah

  • We’re a long-term customer of Cave Financial. Michael and his team consistently provide professional and effective services whilst making us feel valued and seen. We appreciate being a customer of yours for 10+ years.

    Rob

  • I cannot recommend Michael and the team at Cave Financial highly enough. They steered me through a complicated set of mortgage applications with professionalism, good cheer, and were incredibly prompt with every query I made. On top of that they negotiated a better rate! I would not have been able to get through this arduous process without their skill and care.

    Tiffiny

Latest articles