Don't miss out on more savings

My wife has been in KiwiSaver since it started and she now has over $40,000 saved. We are in our late 40s. I work in a small business and my boss has always said he doesn't believe in KiwiSaver and can't afford it. Seeing what my wife has accumulated, I am thinking of signing up anyway. Do I have to tell my employer before I join? How will he know to start making KiwiSaver deductions from my pay?

I am sorry that you have missed out on the benefits of KiwiSaver for nearly nine years.

From time to time people tell me that they haven't joined KiwiSaver because they 'don't believe in it' as if KiwiSaver is like the tooth fairy or the Easter bunny.

Some people fear that the Government will take the money off them before they reach retirement or that it could be lost in a financial meltdown.

These people should carefully read a KiwiSaver investment statement to help them better understand the scheme.

They can also look up the KiwiSaver Act 2006 if they want to know more.

In the case of your boss, it sounds like he is simply too stingy to pay his 3 per cent share - even though the evidence suggests that he would get it back with increased motivation and productivity from his workers.

Ignorant people should be challenged. Most of us do not enjoy confrontations, but there is usually a tactful way to bring up a topic like this. With his negative attitude your boss is hindering your long term financial security and you should do something about that.

Since July 2007 KiwiSaver members who have contributed just $87 per month or more into the scheme will have received around $7250 from the Government alone, by way of the $1000 kickstart (now abolished) and annual Member Tax Credits.

That is a lot of money that you have missed out on. Not to mention all the employer contributions.

There are two ways that you can join KiwiSaver. Either fill out a KS2 form and give it to the person at work who deals with payroll (and that person may be your boss) or sign up directly with a provider.

You can find a list of providers on the government KiwiSaver website.

The provider you choose will give you an investment statement and application form (some accept online enrolments).

On this form you will select your level of contributions ie. 3 per cent, 4 per cent or 8 per cent.

Once your provider has processed your application they will notify Inland Revenue.

IR will send a letter to your workplace telling them you have joined KiwiSaver and that they should start making deductions from your wages, and at what rate.

Your employer will be required to make 3 per cent employer contributions as well.

Waiting for IR to notify your employer may take time, so if you want to avoid delays you should tell your employer as soon as you have joined, and he should start making deductions right away.

If you are worried that he won't comply straight away you should formalise your request by filling out and giving him a KS2 form.

Your best argument may be to tell him how much your wife has saved over the past nine years, and that you feel you are missing out.

If you speak with enough conviction he may even decide to join himself.

- Shelley Hanna is an authorised financial adviser (FSP12241). Her disclosure statement is available on request, free, by calling (06) 870 3838, or see peak.net.nz. The information contained in this article is of a general nature and is not personalised.
Send your KiwiSaver questions to shelley.hanna@peak.net.nz.