The Answer Room - with Gareth Morgan Investments

If you become a member of KiwiSaver, and you are an employee (this means you receive income from which PAYE is deducted), then you will be required to contribute 2%¹ of that income into your KiwiSaver account. Your employer will also be required to contribute a minimum of 2%² into your KiwiSaver account. Only once you have been in KiwiSaver for 12 months can you elect to go on a contributions holiday, which means you are not required to make any contributions to KiwiSaver.  

If you don’t receive any income from which PAYE is deducted, then you are not required to make any contributions to KiwiSaver. (Note that each KiwiSaver Scheme may have its own minimum contribution rules.)

If you are not yet eligible to withdraw ³ from KiwiSaver and choose to make contributions into your KiwiSaver account, you will be entitled to member tax credits until you do become eligible to withdraw. The member tax credit is a contribution by the government of 50c for every dollar your contribute capped at $521.43 per year. Therefore if you make contributions of at least $1,042.86 per KiwiSaver year, you will receive the maximum member tax credit of $521.43⁴.

¹ The 2011 Budget has proposed that the minimum required employee contribution rate will rise to 3% from 1 April 2013. 

² The 2011 Budget has proposed that the minimum required employer contribution rate will rise to 3% from 1 April 2013. 

³ Members are eligible to withdraw from KiwiSaver when they reach age 65 or have been a member for five years, whichever is the later.

⁴ In the first year of membership the amount of member tax credits paid will be in proportion to how much of the year the member was in KiwiSaver. Member tax credits do not apply to under 18s or members who do not have their principal place of residence in New Zealand.