Deadline approaching for 'free money' for KiwiSaver members

Retirement savings piggy bank.
Members are urged to check their annual KiwiSaver contributions are at least $1042 so they receive the Government contribution of $521. Photo credit: Getty.

KiwiSaver members have until the end of June to ensure their annual KiwiSaver contributions are at the minimum level to qualify for the Government contribution.

If members put in at least $1042.86 over the year (just over $20 per week), from July 1 2019 to June 30, 2020, the Government will contribute $521.43. If member contributions are less, they can make a lump sum deposit, as long as it's done by the end of June.

Tom Hartmann, managing editor at Sorted, said that getting $521 of "essentially free money" is not something that happens every day.

"It's just once a year that you get this chance and if $521 doesn't seem like much, remember it's every year," he said.

As KiwiSaver is a long-term investment, the extra money earns interest, compounding the value of savings over time.

"It can compound up to [around] $36,000 by the time someone retires - that's a fair amount," he added.

KiwiSaver is a voluntary savings scheme that helps people save for their retirement. Funds can also be withdrawn to buy a first home.

Monthly Inland Revenue data for March 2020 shows there are 3.038 million KiwiSaver members. Just over 138,000 had taken a savings suspension. 

KiwiSaver members can set up regular contributions from their pay or make payments directly to their KiwiSaver provider. The minimum age for the Government contribution is 18. 

People who are unsure whether their contributions meet the minimum of $1042.86 can check their KiwiSaver annual statement, or contact their provider.

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