For those just getting started with the whole KiwiSaver thing, it can feel a bit odd – where to begin?
Because it’s designed to automatically opt people in when they start a new job (while giving them the choice to opt out), a ton of people have landed in the scheme without really thinking about it. Turns out it’s been a great way to get 2.8 million of us signed up – and saving and investing without even knowing we’re doing it. But this means it’s not necessarily optimised for us to get the best results.
To make the most of it, here are the key things to find out when you are checking in with KiwiSaver for the first time:
You may not be sure if you were automatically joined up. It shouldn’t be hard to find out – ask your employer or contact Inland Revenue. (If you weren’t joined up, you can instead look into how KiwiSaver works to see if it’s for you.)
You can find out if you are already in KiwiSaver by signing up to myIR Secure Online Services or calling 0800 KIWISAVER. While you’re on the line, you can also ask them:
You may know that you’re in KiwiSaver but have no idea which company is managing your money. Again, your employer may know or the helpful folks at Inland Revenue can confirm who you’re currently with (myIR Secure Online Services or 0800 KIWISAVER).
It’s a good idea to know where your money is going. It’s not hard to switch providers, but you need to know who you’re with first so you can check it out.
KiwiSaver providers have lots of funds to choose from. If you were automatically opted in, and your employer doesn’t have a chosen KiwiSaver provider, you probably ended up in what’s called a “default” fund. If you do know your KiwiSaver provider, you’ll find everything about your default fund here:
It’s important to know that default funds are just meant to be temporary holding pens for your money until you choose one for yourself. They’re a conservative option, which may not be the most appropriate for your situation. We all need to make an active choice of which fund to be in. More on that below.
If you’re with a different provider to the default ones listed above, contact the company directly to see which fund you’re in. Then you can gauge whether it’s right for you.
If you’re an employee, your contributions automatically started from your first pay, at 3% of your before-tax pay. Your employer should be contributing 3% as well.
But if you are self-employed, the amount you put in is up to you and needs to be set up directly with your KiwiSaver provider. You may not be putting in anything just yet.
At the very least you want to be putting in $20 a week in order to get the government’s contribution of $521 every year.
After you’ve figured out if you’re in KiwiSaver, which company is your KiwiSaver provider, which fund you’re in, and how much you’re contributing – it’s time to dial things up. This can make a difference of tens of thousands of dollars.
Again, because the opt-in mechanism was designed to just get you started, things are not entirely tuned up at the beginning. So you might be playing the keys on a piano, but it might be a bit off key.
The next step is to pick the right fund for you. Then, look into lifting your contributions to get more out of the money you’re investing. And also check that you’re not being taxed too much.
The right fund, the right tax rate, contributing more – that’s how to dial things up. The more going in, the more potential you have to get more out of KiwiSaver – a solid set-up on which to build your future.