Kiwisaver: End of job not end of scheme

Q. I finish work on November 30 but wish to keep my KiwiSaver going. Does this mean I have to contribute weekly or fortnightly and if so how much? If I take a holiday, if that is possible, for how long can I do that? If I take a holiday do I still receive the $520-odd per year even if I am not contributing at all?

A. If you would like to continue contributing after you stop work, you will need to contact your KiwiSaver provider. They will be happy to help you.

Instead of your employer forwarding your KiwiSaver contributions to Inland Revenue with your PAYE every month, you can set up a direct debit with your provider, choosing the amount and frequency to suit you. Your options will vary depending on your provider. Some offer weekly, fortnightly, monthly, bi-monthly, quarterly and annual payment options. The minimum amount may vary from $10 to $20 per week.

If you will be living on your partner's income, timing your contributions to his or her salary payments would make sense.

As your contributions will be voluntary, you can stop the direct debit at any time by letting your provider know in writing. You don't need to seek a "holiday", this is just for working people who wish to suspend their KiwiSaver a while. If a direct debit doesn't suit your cashflow, most fund managers will accept KiwiSaver top-ups of $100 or more at any time.

This extra saving option also applies to people who are working. They can make extra payments into their KiwiSaver account, for example, if they receive unexpected income. They can also set up a direct debit to make additional contributions over and above their employee deductions, for example if they want to contribute more than the maximum 8 per cent of their salary. If you undertake this exercise, you will find how helpful your provider is. They should make it easy for you to set up payments to suit your budget. If they are not helpful or easy to deal with, shop around. It may not be good reason alone to switch providers, but it is a consideration.

Will you receive Member Tax Credits of up to $521 if not contributing? If you do not contribute anything for 12 months from July 1 to June 30 you will not receive Member Tax Credits.

As you finish work at the end of November you may contribute for five of the 12 months from July 1, 2012, to June 30, 2013, so you will be entitled to some MTC - perhaps $210 if you have been putting in at least $20 per week.

If you can afford to, contribute $20 a week (or $87 per month) while you are not working. That should be enough to get the full MTC each year.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz