KiwiSaver: Young savers win

Younger KiwiSavers don't get the member tax credit or the benefit of employer contributions until they turn 18. Photo / Getty Images

Q: My 15-year-old has a part-time casual job. He is paid the adult minimum wage, plus 8 per cent for holidays. When he started, he opted in to KiwiSaver deductions. But none are being made from his wages and he hasn't enrolled in a scheme. Are employers of casual workers required to enrol them?KiwiSaver is available to under-18s, regardless of whether they are employed or not, but because of their age the join-up process is different.

A: Younger KiwiSavers can join a scheme at any time, but will need your permission. Because he is under 16 your son needs to get the consent of all his legal guardians on the application form. Between 16 and 17 he only needs the permission of one guardian.

Generally, temp staff, whether they're under 18 or not, won't be automatically enrolled in KiwiSaver by their employer. Instead, they will need to enrol directly with a KiwiSaver provider.

But a spokesperson for the IRD says once they have joined a KiwiSaver scheme the member can then choose to have deductions made from temporary employment. "They will need to give the employer a KS2 form and advise they are a member of KiwiSaver," she says.

Anyone under-18 in a more permanent role will be asked on the provider's application form for details of where they work and how much they would like deducted from their pay.

The IRD operates as a clearing house for KiwiSaver contributions from wage earners, collecting payments from employers at the same time as PAYE, student loans, child support, etc. It then passes those payments on to the providers.

The process can take up to three months but the IRD will pay interest of 2.35 per cent while it has your money.

To track contributions paid to the IRD, set up a login for the online My KiwiSaver service: www1.e-services.kiwisaver.govt.nz.

This service only shows money collected from employers and any Government payments you're eligible for. It won't show the different investments that have been made by your provider or any returns you've made.

You'll need to go to your provider for that information.

There are a couple of important things to note about KiwiSaver and the under-18s. The $1000 kickstart from the Government was scrapped almost a year ago, so anyone joining now won't get that payment.

Younger KiwiSavers don't get the member tax credit or the benefit of employer contributions until they turn 18. After that, the member tax credit and employer contributions kick in.

During that first year, the member tax credit payments will be adjusted to take into account how long they've been 18.

The KiwiSaver year runs from the beginning of July to the end of June so someone turning 18 in December would be eligible for roughly half the member tax credit in that first year after their birthday.