Schemes welcome lump sums

I am 65 and still working fulltime. Can I put lump sums into my KiwiSaver now that I am over 65? What about the $500 yearly tax credit - do I also get that if I am still working?

Let's start with your question about adding lump sums to your KiwiSaver. Your KiwiSaver is an investment account, and you can add lump sums to it at any time, and at any age.

The more important question to ask is, should I be adding lump sums to my KiwiSaver?

If you are hoping for a better return than bank term deposits, remember that this will come with some risk.

Unless you are in a very low risk KiwiSaver fund there will be shares within your fund and the value of these can go down as well as up.

You will need to do some research on your fund before making a decision to add lump sums to your existing investment.

Read through your KiwiSaver Product Disclosure Statement (PDS) carefully.

You will find a risk indicator within this document which gives your fund a score from 1 (lowest risk) to 7 (highest risk).

The higher the score, the more volatility you can expect. When do you plan to start accessing your KiwiSaver?

Now that you are over 65, if you have been in KiwiSaver for at least five years you can access your savings at any time.

But market movements may see your balance go up or down and you need to be mindful of this.

Your KiwiSaver scheme's PDS will provide some guidelines under 'minimum suggested timeframe for holding the investment'.

If you plan to withdraw your money in three years' time then you should probably be in a conservative fund. Less than three years then a cash fund may be the best option for you.

If on the other hand you intend to continue using your KiwiSaver in your retirement, then you can take a longer term view of your investment.

How much risk should you take? You can get help with this decision by talking to a financial adviser or going to the Sorted FundFinder website.

From a practical point of view, KiwiSaver providers welcome any lump sum top-ups from investors and will help you with this process, whether you prefer to write out a cheque or use internet banking.

As to your second question about the annual Government top-ups (up to $521 if you contribute $1042 yourself) I am sorry but this discontinues at age 65 whether you are working or not.

The only exception is for those members who joined between the ages of 60 and 65, in which case it continues for five years.

Most members currently reach the 'end payment date' when they turn 65.

At that point they can apply to withdraw their savings, and they are no longer eligible for member tax credits.

Just be mindful that these tax credits are usually added to accounts in July each year.

If a member turns 65 in say February and applies to withdraw all their funds, they should check with their fund manager that they will receive their entitlement for the months they contributed before their 65th birthday.

Alternatively, leave some of the funds in the account until after July.

- Shelley Hanna is an authorised financial adviser FSP12241. Her free disclosure statement is available on request by calling 06 870 3838 or go to www.peak.net.nz. The information in this article is general and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz.