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Your KiwiSaver rights when you turn 18 

Provided you are making personal contributions to your TOWER KiwiSaver Scheme account:

  • The Government will contribute on an annual payment basis the KiwiSaver member tax credit (MTC), of an amount based on 50 cents for every $1 (dollar) you contribute  up to a maximum of $10 per week to your TOWER KiwiSaver Scheme account (approximately $521.43 per year, subject to qualifying criteria).
  • Your employer will also contribute to your TOWER KiwiSaver Scheme account when your wage or salary is paid. Your employer’s current minimum contribution is 2% of your before-tax annual wage or salary and is paid over and above what you earn from your job. In the 2011 Budget it has been proposed that the minimum employer contribute rate for all new and existing members will rise to 3% from 1 April 2013.

With the power of compound interest, these employer contributions can make a big difference to the amount you save up through your TOWER KiwiSaver Scheme account. Employer contributions are well worth having and you are entitled to receive them under certain conditions.

What do you need to do to get these government and employer KiwiSaver contributions?

a) The Government’s KiwiSaver member tax credit (MTC)

  • The Government will automatically contribute your MTC payment after the end of the KiwiSaver financial year (June 30) provided you have made personal contributions within that year and your permanent place of residence is in New Zealand, subject to qualifying criteria.

  • This MTC payment will match your personal contributions to your TOWER KiwiSaver Scheme account at the rate of 50 cents for every $1 (dollar) you contribute up to $10 per week (if you join the TOWER KiwiSaver Scheme part way through the year you will be entitled to a pro-rata MTC based on the duration of your membership) up tp a maximum of $521.43.

  • To maximise this entitlement, you would need to save the equivalent of $20 per week into your TOWER KiwiSaver Scheme account

  • You can make this saving by regular contributions (including deductions from wage or salary) or lump sum payments

b) The employer’s KiwiSaver contribution

  • The employer’s contribution is currently worth an extra 2% per year of your wage or salary before tax and is paid on top of your earnings from your job (Meaning it is not deducted from your wage or salary).In the 2011 Budget it has been proposed that the minimum employer contribution rate will rise to 3% from 1 April 2013.

  • In dollar terms, for every $100 you earn before tax from your job, your employer will contribute $2 to your TOWER KiwiSaver Scheme account

  • Employer contributions up to 2% are currently exempt from tax, until 31 March 2012.  From 1 April 2012 Employer Superannuation Contribution Tax (ESCT) is payable on all employer contributions, and the amount of employer contributions paid into KiwiSaver will be the net amount after ESCT is deducted.  The rate of ESCT payable on these contributions varies depending on the income of the member and is related to individual marginal tax rates. 
     
  • So long as you are making personal contributions of at least the minimum contribution rate from your wage or salary before tax to your TOWER KiwiSaver Scheme account, the employer’s contribution is payable too whether you are working full time or have a part-time job

  • Your employer cannot legally refuse to pay the employer contribution to your TOWER KiwiSaver Scheme account provided you are making your own contributions

  • If you are working already or when you start a new job, you can obtain the employer’s contribution into your TOWER KiwiSaver Scheme account by telling your employer that you want to begin making personal contributions to your TOWER KiwiSaver Scheme account by regular deduction from your wage or salary

  

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