Helen Twose

Helen Twose on KiwiSaver and you

Helen Twose: Choose how much to stash away

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A self-employed KiwiSaver member's level of contribution to their retirement fund is a personal decision.

Salary and wage earners also have the option to contribute 4 per cent or 8 per cent of their gross salary or wages to KiwiSaver.
Salary and wage earners also have the option to contribute 4 per cent or 8 per cent of their gross salary or wages to KiwiSaver.

I'm self-employed and up until now have been just making lump sum payments into KiwiSaver in order to qualify for the government tax credit top-up.

With a relatively predictable income I've decided to make more regular, monthly payments.

I was thinking of making it around 6 per cent of my pre-tax income to roughly equate with what I might be stashing away if I was a regular, salaried employee: that is, 3 per cent contribution from "me" and 3 per cent from my "boss".

Is this calculation too simplistic? Are there other factors at play?

As a self-employed KiwiSaver member the level of your contribution is up to you.

The maximum annual member tax credit you can get from the Government is $521.43 and to get this you need to contribute at least $1042.86 a year.

The 3 per cent plus 3 per cent approach you are thinking of is similar to what a wage or salary earner would be contributing to KiwiSaver at the minimum contribution rate (and would meet the level of contributions required to get the maximum annual member tax credit).

Salary and wage earners also have the option to contribute 4 per cent or 8 per cent of their gross salary or wages to KiwiSaver.

The level of contribution you make to KiwiSaver is a personal decision.

You might consider seeking advice from an authorised financial adviser to help you identify your priorities and decide on the level of KiwiSaver contributions that is right for you.

•Donna Nicolof, BNZ head of wealth and private bank.

Q: With the arrival of my first child I've been thinking I need to get my finances in order.

First on the list is sorting out a will - I don't have one, although my partner does.

It got me wondering what happens with my KiwiSaver on my death.

Obviously I'd like to think that I will die at a ripe old age at which point my KiwiSaver will have dwindled away after years of frittering it on luxury cruises, fine wine and fine food.

But should I be snatched away in my prime what is the process that happens with KiwiSaver funds?

The balance of funds held in your KiwiSaver account will become an asset of your estate in the unfortunate event of your death.

Unlike other forms of property or investments that can be held in joint names or transferred into a trust, a KiwiSaver account can only be held in one person's name and cannot be assigned to someone else.

As such, the funds in your KiwiSaver account will be dealt with according to the terms of your will if you have one.

If you don't have a will in place, the courts will decide how to distribute the assets of your estate - including the balance of your KiwiSaver account.

•Donna Nicolof, BNZ head of wealth and private bank.


* Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players email Helen Twose, helentwose@gmail.com.

- NZ Herald

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