Shelley Hanna: What's the minimum for KiwiSaver

QUESTION: I am 35, on a modest salary with a mortgage. I didn't join KiwiSaver because 4 per cent was too much. Is it still 4 per cent?

ANSWER: No, it was lowered to 2 per cent in April 2009 by the National Government.

When KiwiSaver was set up in 2007 many people, like you, decided that 4 per cent was too much to contribute.

For a person earning say $39,000, 4 per cent amounted to $30 a week.

Now it's half that, or $15 a week.

The percentage is based on your salary including bonuses and overtime.

If you sign up for KiwiSaver your employer will also be required to contribute 2 per cent to your scheme (as you are over 18).

This cannot be deducted from your agreed salary package - it is on top of your usual remuneration.

If you start with 2 per cent you can later increase this to 4 per cent or 8 per cent.

Your employer is not required to contribute more than 2 per cent (from April 2013 this will go up to 3 per cent).

On a salary of $39,000, at 2 per cent you will contribute $780 over 12 months.

In order to get the full tax credit of $521 a year you must contribute $1042 a year yourself (not including any employer or government contributions).

KiwiSaver runs from July 1 to June 30 each year and the tax credits are based on your contributions over this period.

Although it is called a "tax credit" that is something of a misnomer as it is actually real money from the Government paid to your KiwiSaver account. You can top up your KiwiSaver - to get more in tax credits - by putting in a lump sum directly to your scheme provider before the end of June next year. Some scheme providers write to their members in June suggesting that they top up their accounts and explaining how to go about it.

If you join before the end of this month (August) the tax credit will be calculated pro rata for the time that you have been a member (11 months).

So for every month that you delay joining you may miss out on those extra dollars from the government (up to $43 per month). Not a fortune but it's an extra incentive if you need one.

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 specific or 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.