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.Get in touch with us today
Michael is an expert in his field and really goes the extra mile to ensure a professional, thorough and enjoyable experience when looking for Insurance cover or trusted Financial advice. Highly recommended.
Michael has a wealth of information to share with regards to financial planning...he has always provided valuable information to both my clients and me without being a pushy sales person!
I am thrilled with the advice and service Michael provided me for financial planning and for personal insurance. Trustworthy and a very nice chap! I highly recommend his services.
Michael has consistently provided excellent service, financial advice, support and follow-up on insurance services for my business. I would highly recommend Michael to anyone needing clear and honest financial advice.
The ''new regime''
On March 15th 2021, a new law on how financial advice is provided to retail clients will come into effect.
Take more control of your cancer journey
AIA Cancer Care is a specialised type of health insurance that covers costs associated with the diagnosis, treatment, and recovery of cancer. With this new product, you can get access to a broad range of private treatment options and faster access to the latest cancer drugs.
LVR restrictions to be reinstated
LVR restrictions take effect from March 1st, meaning you will need a higher deposit than just a few weeks ago. So what does this mean for you, and will it help cool the housing market?