Two important changes to increase KiwiSaver contributions take effect from 1 April, which will help to encourage a higher level of private savings among New Zealanders, Finance Minister Bill English and Revenue Minister Peter Dunne say.
From next Monday, the minimum employee contribution rate will rise from 2 per cent to 3 per cent. At the same time, compulsory employer contributions will also rise from 2 per cent to 3 per cent.
To find out how much your current KiwiSaver balance may grow to between now and when you turn 65 or are eligible to gain access to your funds check out the calculator here.
These changes were first signalled in the 2011 Budget with the aim being to encourage a higher level of private savings and to make KiwiSaver more financially sustainable and to build a larger pool of capital, English says.
Also it is important to note that for the year to 30 June 2013 and beyond, the KiwiSaver member tax credit rate was halved from $1 to 50c for every dollar contributed by members, up to $521 a year. To receive the maximum government contribution members must contribute a minimum of at least $20 per week or $1,042 per annum.
Almost 2.1 million New Zealanders have accumulated approximately $15.4 billion in KiwiSaver funds. Forecasts are that member accounts will total around $25 billion by 2015, and almost $60 billion by 2021.
Dunne says the changes will ensure that KiwiSaver remains an attractive savings option that is financially sustainable into the future.
“KiwiSaver continues to be a popular savings options for a growing number of New Zealanders,” he says. “It is part of the Government’s wider programme to encourage genuine savings and reduce the need for extra government borrowing and debt. “We believe that most people will find 3 per cent contributions affordable, and the employer contributions will continue to offer an attractive rate of return for the money employees put in themselves."
We encourage everyone to review their KiwiSaver accounts on at least an annual basis and you can compare the performance of the main providers via our KiwiSaver section here.
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