Q In a recent article you state that putting $20 per week entitles one to the full government top-up each July. This $20 weekly is no longer enough for the full top-up. I believe it is now just over $21 weekly. I know I had to top up with an extra payment to bring it up to enough to qualify.

A

Well done on keeping track of your KiwiSaver contributions. Members under 65 and over 18 who contribute $1042.86 from July 1 to June 30 each year should qualify for the maximum $521.43 government contribution. Members who contribute less will still qualify for a top up equal to 50c in the dollar.

Members who are working fulltime and saving the minimum of 3 per cent should get the full contribution, so there is no need for them to top up their account. Those who work part-time, have not worked for a full year, are self-employed or not working need to calculate the top up required. Your provider can help with calculations. Timing is important — the date of contribution for employees is the date the money is deducted from their wages, not the date it reaches their provider. Inland Revenue keeps track of KiwiSaver contributions flowing from employers, and you can find your contribution total through your MyIR login.

I am guessing you are either self-employed or not working. Therefore all contributions to your KiwiSaver are coming directly from your bank account to your provider. The date they are processed by your provider is used to calculate the top up. There may be delays with weekends and public holidays.

As there are 52 weeks in the year, dividing $1042.86 by 52 comes to $20.05 per week. If you want the full top up, you need to contribute that amount for 52 weeks — and make sure your first payment reaches your provider after July 1 and the last before 30 June. For simplicity many people round down to $20 per week, giving them a top up from the government of $520 rather than $521.43.

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In your situation, it sounds like you had a timing problem. Someone who started their automatic payment on Friday, July 5 2019 may find that their 52nd payment does not reach their KiwiSaver account until after June 30, due to processing delays. Providers experience big inflows with members trying to catch the June 30 deadline. If that last payment is too late, they will miss out on $10 from the government in that year. Not a major, but enough to be irritating when you thought you had all your ducks lined up.

It would be better to set the automatic payment to start on July 1, or increase the amount to $21 as you have done. At that rate you only need to make 50 payments to get the full government top up. For those members who prefer to make monthly contributions, $87 per month should be enough. It would be wise to set them up earlier in the month (on or before the 20th) to avoid any delays.


Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06 870 3838 or go to www.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