If you’re a tradie, or another type of contractor, KiwiSaver may seem confusing. Getting the most out of your KiwiSaver account also requires a bit more work than if you were an employee. So, is it worth signing up to KiwiSaver? And how do your contributions work?
You’re viewed as self-employed
The Inland Revenue Department (IRD) says if you’re a contractor, you’re not an employee and so treats you as self-employed for KiwiSaver. This means you’re not automatically enrolled in KiwiSaver, and have to join a scheme yourself.
It also means you aren’t entitled to employer contributions, and your employer won’t help with your employee contributions. You’ll need to make voluntary contributions yourself, via lump sums, or a regular automatic payment.
How to join KiwiSaver
If you’re not enrolled in KiwiSaver yet and you’d like to be, you need to pick a provider. A KiwiSaver provider is a financial services company, like a bank or fund manager. They are licensed to look after, and invest, your KiwiSaver savings, and is your point of contact. There are many different providers, and they each offer different fund types. Find the type of investment fund that suits you, then look for providers that offer this type of investment fund. Then, check out which provider’s offering suits you best. To sign up, contact the provider directly. It’s usually easy to sign up.
You could still qualify for government money
Even though you won’t receive contributions from your employer, you could still qualify for the government contribution (this used to be called a Member Tax Credit). This is an extra $521.43 from the government every year. To qualify for the full amount, you’ll need to put $1,042.86 every year into your KiwiSaver account. If you contribute less, you’ll get a part-payment. You’ll get the government contribution into your account around July or August every year – either the full payment, or a part-payment, depending on how much you’ve put in yourself.
Should you join KiwiSaver?
KiwiSaver is a fantastic way for most people to help save for their first-home deposit, or retirement. And it’s can be a useful tool if you’re someone who struggles to save. Most experts agree that contractors and the self-employed should try to contribute at least $1,042.86 every year, to make sure they get the free government money. That’s as long as you can afford to do so, and it suits your personal situation.
If you’re not contributing to KiwiSaver, you could be missing out on thousands of extra dollars over your lifetime.
How do you contribute
If you’re a contractor or self-employed, your income might be irregular. Work out the best way to contribute to your KiwiSaver account that suits you. That might be a percentage of your income, when you’re paid it. Or it might be an automatic payment every week or month to your KiwiSaver provider.
Read more on the IRD’s website about being self-employed. And JUNO’s dedicated client services team is ready to help you with any questions.
Published 16 September 2019
Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser. All content is correct at time of publication date.