Personal finance and KiwiSaver columnist at the NZ Herald

KiwiSaver: ACC earners miss out on boss top-ups

If you're lucky, your employer will pay a KiwiSaver contribution when you're injured, but ACC will not. Photo / Getty Images
If you're lucky, your employer will pay a KiwiSaver contribution when you're injured, but ACC will not. Photo / Getty Images

Q: I am injured and on ACC - a miserly 24 hours a month, as I was between contracts at the time of the accident. I asked if ACC would contribute to KiwiSaver but apparently not. What other payments qualify for KiwiSaver - from Winz, for example?

A: It is absolutely possible to contribute to KiwiSaver while receiving ACC payments. But it's not obligatory, even if you were making contributions before you were injured.

If your employer is accredited or has an ACC employer reimbursement agreement and is paying your weekly compensation, ACC will not be involved in managing your KiwiSaver contributions.

If you were a member of KiwiSaver before your injury, contributions will continue at the 3, 4 or 8 per cent you've instructed your employer to deduct, unless you apply to the IRD for a contributions holiday.

Your employer may choose to continue its contribution but is not obliged to.

If you are being paid by ACC while injured and want to keep up KiwiSaver contributions, you will need to give ACC a completed KS2 KiwiSaver deduction form.

This is the same paperwork for joining KiwiSaver through your employer. ACC needs this form even if you were previously making KiwiSaver contributions out of your wages before you were injured.

As long as you meet the criteria, you can also join KiwiSaver while you're receiving ACC, in which case you'll need to fill out the forms to start KiwiSaver deductions - you are not automatically "opted in".

Unfortunately, ACC doesn't pay the employer contribution and, again, your employer doesn't need to make any compulsory employer contributions.

Those are a KiwiSaver benefit available only to wage and salary earners who are actively contributing to their KiwiSaver through their pay.

Employer contributions aren't paid to anyone who is on a contributions holiday, who has taken leave without pay or is under the age of 18 or over 65, although, as with ACC payments, employers can choose to voluntarily contribute in these circumstances.

The self-employed and stay-at-home parents don't receive employer contributions, either, but are eligible for the other KiwiSaver benefits like the member tax credits and first-home withdrawal. Their contributions are made directly to the provider or through IRD.

Income-tested beneficiaries also don't get an "employer" top up. They can belong to KiwiSaver, but can't have deductions made from benefits.

Like the self-employed and non-working, beneficiaries need to join KiwiSaver through a provider and make voluntary contributions.

For those on lower incomes, consistent contributions into KiwiSaver is important if you're considering applying for the HomeStart grant to buy a first home.

This Government subsidy, worth between $3000 and $10,000 a person, only kicks in if you've made three years' worth of contributions at a minimum level - 3 per cent of your income or the minimum wage for non-earners.

- Herald on Sunday

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