KiwiSaver’s value to the over-65s
Bad news, I’m afraid. Once you qualify for the pension, you will no longer qualify for the Government’s member tax credit in KiwiSaver, no matter how much you contribute. If you’re working, your employer can also choose to stop their contributions.
There are still benefits to being in the scheme, though. It suddenly becomes a lot more flexible – you can withdraw your money if you want, and choose to make whatever contributions suit you.
It’s also a cheaper way of getting access to managed fund investments, which should give you better returns than putting your money in a term deposit, especially in this low-interest-rate environment. KiwiSaver providers have an obligation to keep their fees ‘‘reasonable’’, which other managers don’t. Many offer ways to help you draw down your money in a structured way, or can talk to you about how to invest a lump sum for income.
You have lots of options – get some advice on the best thing for your circumstances.
Your friend’s contributions are being made correctly. Employer superannuation contribution tax is deducted from contributions made to the scheme. Inland Revenue says that it’s important to note that this contribution is usually on top of the employee’s normal gross pay – unless both parties have agreed otherwise.
If you have a question about personal finance or consumer issues, email susan.edmunds@stuff.co.nz