Holidays are fun. But not if they mean you could be destined to live in poverty.

More than 1.1 million Kiwis who are enrolled in KiwiSaver don't contribute. Many of those may retire with no more than basic NZ Superannuation, which only just stretches to pay the basics.

AMP surveyed 506 of its KiwiSaver members who are no longer contributing and found reasons they had stopped putting money in included the fact they were on low incomes, or weren't in paid employment, including many who were home-makers.

Conventional wisdom would have it that low earners can't afford to save.


My interest was piqued when I heard the Ministry for Social Development's Sonya Cameron say at a Financial Capability Summit that research with low-income clients has shown the ability to save is not dependent on income. It's motivation.

"Most people said they can save a small amount if they had sufficient motivation," says Cameron.

Worryingly, the AMP research found that some employers encouraged their employees not to invest in KiwiSaver. Pity those employees. Even the $521.43 annual member tax credit will grow to more than $36,000 in retirement.

Here are five reasons you should restart your KiwiSaver.

This is no holiday

The term "contribution holiday" was a bad choice of words for an action that could well mean you can't afford real holidays in your retirement.

Tom Hartmann, resident blogger at, prefers "savings suspension".

I'd also like to see the tax credit renamed "bonus" to make it more appealing.


No one else is going to look after you

Sadly we live in a society where you sink or swim on your own, albeit with a basic safety net from Work & Income.

No one else is going to top up your NZ Super if you don't save now. Just do it.

I've heard many investors say they could do better themselves than a KiwiSaver manager.

This might be true. But they won't be getting the tax credit each year and many find reasons to dip into non-KiwiSaver savings.

If you're that clever you'll have lots of other money to invest anyway. Putting a mere 3 per cent of your income into a relatively safe bet such as KiwiSaver is a good way to get a nice bonus come retirement.

Keep up with friends, family, peers and the Jonses

Ask how much others around you have saved in KiwiSaver. If they've been squirrelling away small amounts since day dot they will have tens of thousands of dollars built up in their KiwiSaver pots.

The longer you leave restarting payments the bigger the gap between you and them will become.

Simplicity KiwiSaver chief executive Sam Stubbs stuck his head over the parapet at the Commission for Financial Capability's (CFFC) annual summit in June to say what many others dare not.

"The C-word" as he put it. That's making KiwiSaver compulsory.

Ask Aussies what they think of their compulsory superannuation savings and most are very pleased indeed.

Yet it will take a brave government to make it compulsory here because it began as a voluntary savings scheme.

The sooner compulsion happens, however, the better.

The people who are most likely to benefit from it tend to be those ones who haven't joined or are taking these so-called holidays.

There is an argument by the naysayers that if we all have KiwiSaver that a future government will then ditch NZ Super.

It might. But that's all the reason to have more, not less saved.

You take advantage of growth from compounding

It's easy to fritter 3 per cent of your income. When your returns earn their own returns your savings get supercharged, says Hartmann.

Compounding, as this is known, is a bit like a snowball that grows as it rolls down the hill.

My own KiwiSaver pot is more than double the amount that I contributed into it thanks to this compounding effect of investment growth on investment growth.

Every small monthly contribution nudges my KiwiSaver higher, but compounded growth on earlier contributions has an even bigger effect.

There will of course be times when the balance dips, but over a decade or more those temporary dips will be overtaken by growth.

Think about the free money

The $521 isn't the only "free" money with KiwiSaver.

There is also your employer's contribution, assuming they don't make you pay that (as some do).

The AMP found that only half of the non-payers were even aware their employer must match their KiwiSaver contributions up to 3 per cent.

If you haven't yet bought a house, the KiwiSaver HomeStart grant can add up to $20,000 of free money for a couple.

The investment growth mentioned above is more free money that you wouldn't otherwise have.

Currently KiwiSaver holidays last for five years.

Hartmann and many others would like to see that reduced to one year or even less to nudge Kiwis to re-start their savings.